Summary of Key Lessons
With the advent of globalization and technology, international trade and business have grown exponentially. Globalization has brought about an integrated world economy composed of different markets and production chains. I understand that market globalization is where historically distinct and separate national markets merge into one huge global marketplace. In production globalization, companies strive to reduce their cost structures and improve quality to compete evenly. National differences in cost and quality of production factors are vital to sourcing goods and services from different parts of the world (Global Business Environment).
Globalization spurs business operations toward greater prosperity, efficiency, quality, and profitability. Since companies trade across borders, specific aspects drive globalization to realize predetermined goals. I identified two drivers: declining trade and investment barriers primarily determined by trade agreements, and technological influences such as the internet, communications, and transportation technology. Nonetheless, companies must understand these drivers in the context of their implications on production and markets in a globalized business environment.
The nature of international business is gradually changing in response to the changing global economy. As these changes progress, so does the flexibility to operate across borders with minimum barriers. The world economy’s demographics vary depending on the global output and world trade picture, foreign direct investment picture, the nature of the multinational enterprise, and the world order (Global Business Environment).
However, the twenty-first century has witnessed a globalization debate on whether shifting to a more integrated and interdependent global economy is good. This analogy remains backed-up by politicians, economists, and business leaders. However, not supported by those leading anti-globalization protests. (Global Business Environment).
The global marketplace is diverse and sophisticated, hence the need to understand how globalization processes create opportunities and challenges for management practice. I think that everyone interested in international business ought to focus on international trade or investment. Therefore, at this point, I explain some aspects of multinational enterprises (MLEs): a firm ought no to invest directly in operations in other countries to be engaged in international business but ought to import or export products from other countries (Global Business Environment).
Managers are responsible for steering business operations to greater heights. Therefore, managers should acknowledge differences between countries and embrace disparities in their cultures, political, legal, economic, and development levels. For example, a management approach to Finnish workers will be different for Japanese workers; consequently, managers should adapt to these changes. I contend that managers should mainstream domestic operations in target countries to initiate strategies that minimize cost and maximize value-added (Global Business Environment).
Global Trade (Global Business Environment)
In global trade operations, governments influence trade policy elements, including tariffs, subsidies, import quotas, administrative policies, local content requirements, voluntary export restraints, and antidumping duties. Consequently, arguments for government intervention in international trade are two-fold: political and economic. Economic interventions focus on economic benefits that bolster a nation’s wealth. Consequently, political interventions protect particular groups’ interests at others’ expense (Global Business Environment).
In the case of the US renegotiating a trade deal with South Korea, I noted that the US government’s intervention aimed to safeguard the interests of its automobile companies. This analogy of protecting interests often clouds some critical aspects of trade agreements, especially in political interventions. Sometimes, the government’s influence is justified when it restricts imports of goods and services while initiating policies that boost domestic production and exports (Global Business Environment).
Besides government influences, managers are responsible for initiating effective business strategies to attain established goals. With globalization, firms can achieve these goals by mainstreaming profitability and profit growth rates over time. We have seen that business strategies are based on value creation, strategic positioning, operations, and market expansion. Furthermore, expanding into international markets allows a market to attain greater returns. Hence, products offerings remain transferable to markets where competitors lack product offerings and competencies.
Moreover, for companies contemplating expansion, critical considerations remain vital based on markets to enter, when to enter, and on what scale. The first step remains to identify attractive markets and determine an appropriate entry time (Rosa, Gugler, & Verbeke, 2020). This allows a firm to set presence before or after other businesses. Hence, it remains crucial for deciding an effective business strategy(Global Business Environment).
Also, companies must consider the scale of entry strategic commitments, and market entry summary. I have identified six different entry modes into a foreign market. Mainly, exporting, turnkey projects, licensing, franchising, joint ventures, or wholly-owned subsidiaries. Nonetheless, selecting an entry mode is determined using core competencies and cost reduction pressures. As stated before, globalization presents challenges of different extremes and the same remain visible for every entry mode.
Over the years, the global scope of international trade experiences a constant increase in sales worldwide. Furthermore, spurred by foreign market penetration. Most international businesses operate from their parent nations and home-oriented. On the other hand, most corporate globalization operations were normative instead of precisely describing reality. I assessed business outcomes from past decades and established that companies operating from a home-oriented basis have reduced than before(Global Business Environment).
After years of working in an international setting, I have understood globalization’s concepts. Consequently, established the effects of trade policies on international businesses. Expansion into foreign markets can be very demanding in terms of resources but with effective business strategies. Hence, achieving desirable outcomes is inevitable. Moreover, government policies play a vital role in ensuring domestic and international trade activities are synchronized.
Governments present different reasons for using barriers to imports. Some of the government-enacted barriers include price-based constraints, quantity limits, cartels, and other non-tariff barriers. Applicability of the lessons focused primarily on trade restrictions. For example, high tariffs on imports helped my organization reduce reliance on foreign suppliers and promote export-based growth. Trade restrictions also restrain foreign firms from dumping, reduce balance-of-payments problems, and serve political goals(Global Business Environment).
Let us consider an international business dealing with television imports. Every time importation costs increase, a company gets the advantage of producing TVs cheaply and consequently boosting domestic trade. Local production would be better if government agencies license local firms. Consequently, and provide alternatives to direct incentives and other organizational strategies that utilize local production techniques.
In some cases, local businesses may broker deals with the government to produce small quantities of TV sets in return for being granted permission to import other products such as appliances without prohibitive tariffs. This scenario reflects the value and applicability of the key takeaways from market and production globalization and government roles in influencing trade policies(Global Business Environment).
Rosa, B., Gugler, P., & Verbeke, A. (2020). Regional and global strategies of MNEs: revisiting Rugman & Verbeke (2004).