International business is defined as business activities between two or more countries in order to benefit individuals, firms and other business entities. Many countries come together to enhance the business operations within and beyond their borders. Proponents of international business argue that it is beneficial for countries to transact businesses across their borders so as to foster good relations and peaceful coexistence between nations. On the other hand, the opponents maintain international trade is of no tangible good because it compromises sovereignty of the developing countries in favor of the developing world. This brings the whole essence of international trade into question considering that countries go as far as introducing international trade in all levels of education, set policies governing trade and investment and ensure that politics and business ethics go side by side. This article seeks to examine different facets of international trade.
International business imperative
Fully aware of the ongoing industrialization in different countries, the home market has proven way far inadequate to meet the demand of the manufactured goods. Similarly, service company providers such as banks, insurance, and consulting companies find the home market inadequate for the growth of businesses. The same applies to entertainment industries such film and music industries which yearn for the expansive global market to expand. Exploring the expansive international market is inevitable if at all these companies have to expand.
Consumers also need a variety of choices to choose from and the local companies may not be in a position to meet all the consumer demands. Moreover, companies need new ideas drawn for different parts of the world in order to meet the dynamic and highly diversified tastes of customers. Not a single country can provide enough employment opportunities for their citizens and the need to create more job opportunities can only be met under the auspices of international trade. Some countries, especially the developing countries, will continue to underutilize their natural resources devoid of the international business.
Globalization is also another aspect of international trade that should be not avoided. International business creates links among countries all over the world. It brings together individuals from different countries, institutions, and exchange of technology. Through globalization, international products and services are readily available to consumers in many countries all over the world. Countries like Brazil ensure that there is continuous flow of coffee into the international market- an activity that has seen the Brazilian economy grows tremendously due to wider market coverage. Therefore, international trade should be encouraged globally.
In addition, studying international business should be encouraged because it equips students with the necessary skills on the economic benefits of international trade. They are also made to understand the benefits that firms get from the international trade and the societal demerits such as dumping of cheap commodities in the home market. Dumping results to losses for the domestic firms since the price of the commodities are reduced.
Trade and investment Policies on International Business
In carrying out international business, countries ensure their national sovereignty is protected by setting policies to regulate, protect and direct national policies. Such policies are set to improve the standard of living of citizens by creating employment opportunities and foster transfer of technology from the international arena to the domestic firms. More often than not, government officials set policies regulating the imports to protect the infant industries. In order to ensure free and fair international trade among countries, a common agreement is reached on the tariffs, commonly known as the general Agreement on Tariffs and Trades. Further, the World Trade Organization administers international trade and investment accords which ensure that the affluent nations do not take undue advantage of the less developed nations.
The Cultural Environment of International Business
This facet of international trade cannot be ignored. The technological culture is likely to change thanks to international trade. Technology initiates the process of invention and innovation in the developing countries. Moreover, international trade not only leads to the exchange of material element such infrastructural development leading to better provision of health care and education but it also creates a competitive environment for firms leading to efficient and quality production.
However, most individuals are affected by the cultural stereotype, especially the developing countries. They believe that the foreign culture is better that theirs. For instance, the U.S. citizens are well known for their fluency of English language and many people who interact with them would want to speak like them. Thus, the cultural norms and traditional ways of life are likely to change in all countries courtesy of international trade.
Politics, Law, and Business Ethics
This is an area of concern to international business managers because they have to adhere to the various sanctions and export controls put by the governments. International politics is very essential in the operation of international business. The political relationship between the home country and the host country can either promote trade or hinder trade from taking place among them. Multilateral agreement is also essential in the promotion of international business.
The laws governing imports and exports are important in the international business in some countries, like U.S., are very stringent in terms controlling the movement of goods and services into the country. Finally business ethics are meant to ensure good relationships between different countries across the world. Vices like bribery and corruption are known to hinder realization of smooth international trade between countries owing to the introduction of antitrust laws in affected countries.