The Scope International Business 5
Running Head: Scope of International Business 1
The scope of International Business
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The significance of international business is seen whereby it allow businesses to have a greater scope to facilitate selling their goods and services. It is very risky for a company which relies on the home market only as it may fail badly if the market falls. According to Dai et al. (2014), while a firm engages in selling its products internationally, it greatly minimizes the chances of such failure since it is unusual for every market to decline at the same time. For instance, manufacturers from retaining who make their sales around Europe have experienced some of the markets fall because of the Eurozone crisis, but they have successfully increased merchandises to Asia especially in China and also in India where there is a sharp rise in demand for British goods. No country is self-sufficient no matter its size. Also, no state can be independent from other countries and get what it requires. Moreover, a country requires raw materials from other countries to be able to produce products that might also be needed by other countries. This creates a chain for the states to import and export.
Nowadays, it has been made possible for both small and big countries to step beyond their borders to reach for broader markets which can deliver in supplies and products which they require. On the other hand, there will be a great benefit for the businesses in these countries as they will be able to get lower costs on products. Also, small countries will be able to have a competitive edge over bigger countries. The demand for imported goods and services is enlarging exponentially, and businesses can spot opportunities in exports and imports. Companies can lower production cost as well as buying costs hence being able to make higher profits due to new international markets that have been opened to both importers and exporters.
Also, technology has made a significant impact on international business. Due to the adoption of the new technology by the organizations, there has been an occurrence of new concepts like learning organizations and fast- learning organizations, and organizational learning that is quite common, in fashion. The connection between the two incidents is undisputed. Change in technology in its simplest and widespread notion depicts the introduction of new technologies in the firm, a functioning system, organization and enhancement of the current ones. However, if the technology is considered a social process, in a historical vision, we will discover that it is due to expansion in the productive forces that results to changes in the technical bases of production. This will, therefore, result in growth in labor productivity causing the company also to acquire different cultural behaviors.
However, due to increased international businesses, trade barriers have been imposed in the economy by different companies to prevent countries from dependence on the import market for the promotion of local demand. Also, the barriers have been imposed due to the preference of government policies and even government restrictions as they control a particular commodity. Also, the countries have come together and formed a General Agreement on Tariffs (GATT) and Trade which is meant for regulating international trade. This agreement was purposely made to eliminate preferences and reduce tariffs and other trade barriers. The contract (GATT) was passed in 1947 and lasted till 1994 where it got replaced by World Organization Trade in the year 1995. However, still, the GATT 1948 is still active under the WTO framework, subject to the modifications of GATT 1994. The World Trade Organization was formed out of negotiations, and it operates under talks. Under WTO, members gather to solve problems they face while trading. When countries have encountered trade barriers and want them to be lowered, the WTO negotiations have aided them to open markets for trade. The organization is not only meant for the market opening but also, in some circumstances it rules support was maintaining trade barriers. This includes consumer protection and spread of disease prevention.
In conclusion, through international business, new markets have emerged that are big enough to allow sales and purchase of goods and services produced in our firms. Also, it is through the international business that countries maintain peace as they depend on each other for both resources and market which is the central aspect that keeps the state running. Also, countries experiencing economic crisis are aided out as China is going to more of African countries. Through international business, we get a different range of products in surplus. Also, it has helped in the development of the local market as it can learn the technics of other markets and apply them. Through international business, local companies get a higher profit because of the reduced cost of production as well as the cost of buying products. It is through the global market that we get market diversification. It safeguards companies which are likely to fall due to failure in the local market.
In summary, countries collect a lot of revenue due to international business. Also, there is a new pathway to business growth. It is through the global market that many organizations have been able to adapt to the new technology that has facilitated for efficient flow of business.
References
Dai, L., Maksimov, V., Gilbert, B. A., & Fernhaber, S. A. (2014). Entrepreneurial orientation and international scope: The differential roles of innovativeness, proactiveness, and risk-taking. Journal of Business Venturing, 29(4), 511-524.
Why International Business Is Important?. (2016, Mar 21). Retrieved from https://studymoose.com/why-international-business-is-important-essay