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Brief History Of International Business Business Essay

International business is defined as the trades that are completed across national borders to fulfill the objectives of individuals, companies and organizations. The different modes by which international business has been done are import-export trade, overseas direct investment, licensing, franchising and management contracts. Over the last five decades international trade and investment have become faster than the home economies. International business facilitates stream of idea, services and capital throughout the world. The effect is higher degrees of technology, faster dissemination of goods and information worldwide, more efficient use of real human capital and better access to financing (Czinkota, Ronkainen and Moffett, 2009).

Brief Background of International Business

International business is not really a new happening but has been utilized throughout the world for a large number of years. From the routes proven in the Mediterranean, the Phoenicians, Mesopotamians, and Greeks performed trading. As sophisticated business techniques emerged, facilitating the move of goods, resources and money between countries flourished. This development was further stimulated by colonization activities. The Industrial Trend further stimulated the development of international business by giving methods of development for mass, markets and successful methods for utilizing raw materials. The innovations and technological trends from Industrial trend further accelerated the easy circulation of goods, services and capital between your countries. The development grew at unprecedented levels by 1880's as the industrial revolution was completely swing in Europe and america. Growth continued within an upwards spiral as mass development was understood and the produces were pushed to seek foreign markets for their products. This designated the introduction of multinational businesses. (Ajami, Cool, Goddard and Khambata, 2006)

Factors resulting in Progress in International Business

Development and extension of technology

The launch of telegraph in 1837, calling in 1876, the cellular in 1895, the aero airplane in 1903, the television set in 1926, the liquid fuelled rocket in 1927, the coaxial cable connection in 1930's and digital computer in 1946 were all the main element events that induced the development of international business. Next to air travel, electronic communication, digital information handling has been the other primary area of know-how. All these technological developments provided the platform for companies to create off increased variety of international business activities. (Marios Katsioloudes, Spyros Hadjidakis, )

Liberalization of cross border activities

The governmental barriers for international business have been decreased following the Second World Battle. The European Union, NAFTA, ASEAN and other local economic blocs throughout the world provide fewer restrictions on cross boundary movements. EUROPE was given the Nobel award for serenity 2012 in acknowledgement for its constructive handling of peacefulness, improving relations between countries through trade, reconciliation and individuals rights in Europe within the last six ages. (Europa. european union, 2012) The Western commission leader Jose Manuel Barrosa first of receiving prize said that, "we honor this award and will maintain what had been achieved. This achievements will propel the search for shaping an improved organized world with the ideals of flexibility, democracy and individuals protection under the law. "(Guardian. co. uk, 2012)

Development of promoting services

Governments and companies are suffering from services that aid further international business. For instance Mail, which really is a federal monopoly, could be moved by an flight other than that of the united states of origins could go through numerous countries before reaching the final destination with the stamp of the united states of origin. Also banking institutions are suffering from effective and efficient opportinity for companies to receive payment for their international sales. The banking companies can help in the payment of any money through various international transactions upon the receipt of goods /services. (Marios Katsioloudes, Spyros Hadjidakis, )

Distinctive elements of international business

The four distinctive elements of international business are:


International Business Environment

Unique Culture

International Business Management

Globalization: People around the world are more linked than ever before. Goods and services produced in one area of the world is progressively more available in other areas of the world. This trend is referred to as "globalization. " Globalization identifies the change toward a far more involved and interdependent world economy. Globalization has two components that are globalization of development and globalization of marketplaces. (Aswathappa)

Globalization of markets refers to the merging of independent and distinct market place into a single market. (Subba Rao, 2009). The global acceptance of consumer products such as Sony Walkmans, Coca-Cola, Levi's Jeans, Citicorp Credit Cards, MCDonald Hamburgers are considered as prototypical examples of this pattern. By offering a standardized product worldwide they are helping to create a worldwide market. (Marios Katsioloudes, Spyros Hadjidakis, )

Globalization of production identifies the tendency among organizations to source goods and services from locations throughout the world to have global good thing about national dissimilarities in the price and quality of factors of production. (Labor, land, energy and capital) Companies hope to lower overall cost framework in so doing. For example, Boeing company's aircraft airliner 777 has 132, 500 aspect parts which are produced around the world by 545 suppliers. (Marios Katsioloudes, Spyros Hadjidakis, )

International Business Environment

The international business environment is highly characterized and inspired by

International Politics

International Culture

International Trade

International financial markets and Institutions

International Politics

International politics is, the burkha matter for Multi Country wide Enterprises. (MNE's) The past 2 decades have witnessed dramatic change in their political systems. Most of the countries in the Eastern European countries, in the Americas' are building market economies in varying levels. MNE's feel more confident in starting up their procedures in market influenced economy as they are endowed with more freedom to fix prices and much more liberty in carrying out their business operations. Until MNE's believe that the government is willing to use the steps essential to ensure that assurances are kept and they're able to repatriate their money, they will move forward very cautiously using their investment ideas. (Rugman and Collinson, 2006)

International Culture

Despite the various patterns and techniques of globalization, Cultural understanding is an essential aspect for MNE's when it performs in international world. As an example, the culture, beliefs and etiquettes that happen to be adopted in the India is totally different from that of the western world and the companies and folks who get excited about business in India should comprehend the Indian culture to its full magnitude. 'When going to a business appointment in India, bring family images. Indians enjoy talking about each other's people, which is seen as building trust and rapport before conducting business. '(Czinkota, Ronkainen and Moffet, )

Real Business Circumstance - Saudi Arabia: Many organizations from foreign countries entered into the Saudi Arabian market following the crisis it faced in 1970's. However, not all were successful as they failed to understand the Saudi Arabian culture. A major U. S security company triumphed in a large agreement to set up security system for a client in Saudi Arabia. The troubles began when the shipments from the U. S. which landed in Saudi Arabia were not released by the custom officials. The reason behind the detainment of the shipments was that the security devices were wrapped in magazines which contained fashion photos of scantly claded women. This offended the social sensitivities of the officials of a nation in which majority of the ladies wear an extended garment called 'Abayah'. (Misra and Yadav, )

International Trade

International trade is a wide term, which include all commercial transactions that take place between countries. Multinational companies are major players in international trade and account for the major proportion of International trade. Some typical samples for international trade are, Ford making gear field in its manufacturing plant in Bordeaux and exports it to assembly vegetation in different EU countries. Spain relies upon Nigeria, Algeria and Libya for 99% of its natural gas requirements. (Misra and Yadav, )

International Financial Marketplaces and Institutions

Irrespective of whether a company or bank engages in international trade, it's important that its professionals understand some key areas of international financial market segments. The euro currency market, international monetary system, market all influence the functioning of market segments for goods and services. The euro currency market may give a low cost borrowing opportunity; the international economic system may place a framework which may affect many organizations and the foreign exchange market determines the price and availability of foreign currencies found in business by many firms.

Unique Culture

International business and its by product globalization will ensure and enforce a distinctive culture around the world. For instance, Pizza which has had its origin in Italy is currently widely accepted and consumed all over the world thus integrating the culture and causing a distinctive food culture. In the same way Indian outfits are in popular nowadays in the U. S and European countries. So international business is providing forth one common culture which brushes out all countrywide and cultural obstacles.

International Business Management

International business management is focused on developing business operations on a global range. (Coade, 1997). The main element features of international business management are:

The components of market analysis which are required to start out business operations abroad.

Guidance about how to effect the international strategy on business

Construct a vibrant market entry strategy

Easy ways to search for a competitive advantage

Why do companies go international?

The wish to increase sales and revenue to acquire inputs at least cost and to lessen business and financial risk through geographic diversification has led to the expansion of MNC's. The factors that led the companies speed up their business activities worldwide are:

Minimize competitive risk

Expand sales

Acquire resources


Minimize Competitive Risk

Companies seek to have global occurrence for protective reasons. The intense competition between companies in the home market incites companies to acquire global functions.

Real Business Case - Tata Motors: Since early on 1990's India have been witnessing strong waves of liberalization, privatization, and globalization. The automobile giant in India, Tata motors understood that if it wants to grow then it cannot manage to acquire business solely to the fortunes of one country as motor vehicle business is highly competitive and the competitiveness is determined by the quality, economies of range and efficiency that could be increased if the business enters international market. The mature management of Tata Motors where still left with the question "if they should remain as an exporter of vehicles which they were doing since 1961 or even to enter the international market which can contend with the best in the business. " The solution they have zeroed in was to widen its business operations than just exports (Misra and Yadav, 2009).

Acquire Resources

Another important purpose of companies to create for international business is to acquire resources such as raw materials, capital, products, technology, products or services. The reasons for this would be:

Non-Availability of resources in the home country.

High prices of resources in the home country.

To seek resources of better quality/standard.

Real Business Case - Philips: Cheap labor in China brought Philips to China. In 2002 Philips got 23 factories in china that have been either wholly held or joint endeavors. Two third of the company's export products were from these vegetation. Matching to Gerard Kleiterlee, the chief executive and CEO of Philips Consumer electronics, " China is the second most significant market for Philips Surpassing Germany within the last one fourth of 2009. We could one of the most significant multinationals in the united states operating in 600 Chinese cities and employ 15000 people. " (Philips. com, 2010)

Minimize Risk

Organizations always want to reduce the chance by lessening the swings in sales and revenue. Companies try to mitigate the vulnerability to an individual economy insurance agencies a broader foundation in multiple geographies.

Real Business Case - Nestle: In 2001, Nestle witnessed slower growth in Western Europe and in the U. S. but this was offset by higher development in Eastern Europe, Latin America and Asia. Matching to Peter Brabeck, Vice chairman and CEO of Nestle, ' Nestle has delivered a good performance by any strategy in the first half of 2002 demonstrating its convenience of expansion and performance improvement even in a difficult global environment" (Nestle, 2002).


Cost aspect is a substantial desire for organizations to obtain inclination towards global business. Many organizations go set for international business to become more competitive internationally by minimizing their costs.

Real Business Circumstance - Toshiba: The manufacturing of Toshiba laptop is dispersed geographically where the mix of factor costs and skills are most favorable. The developing of laptop components such as memory space chips and display screens take place in Japan, microprocessors and hard disks made in the U. S. and lastly assembly takes place in Singapore from where it is transported to the U. S, European European countries and Japan.

Global Trends shaping International Business

Emerging market segments increase their global power

Emerging marketplaces are seen as the worlds' economic growth engine. The emerging market segments where once viewed as home for natural resources, cheap labor and low processing cost. But now these emerging market segments have emerged as promising markets because they are having rapid population growth, sustained economical development and growing middle class. It really is expected that BRIC countries (Brazil, Russia, India and China) would take into account 50% of global GDP expansion by 2020. (Ernst and Young, 2012)

Cleantech become a competitive advantage

Most of the government authorities and organizations around the world are extremely well aware of the carbon emissions and its own repercussions. The cleantech enabled transformation to a minimal carbon, resource reliable economy would be the source for next commercial revolution. China, India, Brazil and Germany are attaining advantage in solar, wind, biofuels for its energy requirements. (Ernst and Young, 2012)

Global Banking sees restoration through transformation

The financial institutions all around the world are required to acquire regulatory changes following a global economic slowdown. (Ernst and Young, 2012)

The final condition of global regulatory platform is still unclear but the international banking changes tremendously in pursuing fundamental ways:

Heightened corporate governance

More constraints on main concern trading, investment funds in hedge funds and private equity funds.

Executive pay will be limited.

More focus on consumer safety.

Demographic shifts will enhance global workforce

Even although global human population is on a rise, the availability of skilled workforce is shrinking. The info shows that the demographic separate will occur between countries with more youthful skilled human population and aging shrinking workforce. The war for talent will be strong in areas which require higher skill levels and education. (Ernst and Young, 2012)

Rapid technology advancement creates a good, mobile world

Last 25 years have been designated by digital revolution and it offers changed the way we work and talk. The consumers want more powerful devices and applications, in the mean time businesses are looking for cost-effective technology. Still there is room for better invention in the regions of business intelligence, smart devices and cloud computing which would revolutionize the complete process by which international business is being carried out. (Ernst and Young, 2012)


From daily bakery to fuel, cosmetic makeup products to vehicles, entertainment to basics, it is hard to visit a product without having the label of your foreign brand. In fact international business has changed our lifestyle, culture and likes. It should be observed that the positives of international business is overarching the negatives than it. International business has dished up as a bridge for the producing nations to achieve the status of developed nation, for underdeveloped countries this is a ray of anticipation as well as for the developed world it is a means to further stretch their business businesses and supremacy. The good international business has done to the real human kind can't ever be projected and the annals has proven that the international business activities were blossomed when serenity existed between nations. Thus international business can be viewed as icon of prevailing calmness, prosperity and basic wellness of mankind.

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