jueves, 18 de junio de 2015

Why study International Business?

Students who wish to increase their understanding of global markets and various regions of the world should strongly consider studying international business. The world’s economy is increasingly global. Studying international business will provide you with insights into the global economic and business climates. Additionally, many institutions strongly advise (or require) students who major or minor in international business to study a foreign language and/or to complete an overseas study or internship experience. Taken together, such a course of study can be particularly beneficial for students who hope to one day work abroad.

Studying international business can prepare students for positions across the public, private, and non-profit sectors, for example in business, go
vernment, and international agencies. Students might expect their day-to-day work to revolve around international trade, global business operations and planning, or industrial development, for example. Additionally, international business studies can be greatly beneficial for students who plan to pursue graduate studies in areas such as law or public policy where a robust knowledge of international business can be helpful.

About the Career

What is Internacional Business?

International Business conducts business transactions all over the world. These transactions include the transfer of goods, services, technology, managerial knowledge, and capital to other countries. International business involves exports and imports.

An international business has many options for doing business, it includes:

  • Exporting goods and services.
  • Giving license to produce goods in the host country.
  • Starting a joint venture with a company.
  • Opening a branch for producing & distributing goods in the host country.
  • Providing managerial services to companies in the host country.

Features of International Business:

  •  Large scale operations : In international business, all the operations are conducted on a very huge scale. Production and marketing activities are conducted on a large scale. It first sells its goods in the local market. Then the surplus goods are exported.
  • Intergration of economies : International business integrates (combines) the economies of many countries. This is because it uses finance from one country, labour from another country, and infrastructure from another country. It designs the product in one country, produces its parts in many different countries and assembles the product in another country. It sells the product in many countries, i.e. in the international market.
  • Dominated by developed countries and MNCs : International business is dominated by developed countries and their multinational corporations (MNCs). At present, MNCs from USA, Europe and Japan dominate (fully control) foreign trade. This is because they have large financial and other resources. They also have the best technology and research and development (R & D). They have highly skilled employees and managers because they give very high salaries and other benefits. Therefore, they produce good quality goods and services at low prices. This helps them to capture and dominate the world market.
  • Benefits to participating countries : International business gives benefits to all participating countries. However, the developed (rich) countries get the maximum benefits. The developing (poor) countries also get benefits. They get foreign capital and technology. They get rapid industrial development. They get more employment opportunities. All this results in economic development of the developing countries. Therefore, developing countries open up their economies through liberal economic policies.
  • Keen competition : International business has to face keen (too much) competition in the world market. The competition is between unequal partners i.e. developed and developing countries. In this keen competition, developed countries and their MNCs are in a favourable position because they produce superior quality goods and services at very low prices. Developed countries also have many contacts in the world market. So, developing countries find it very difficult to face competition from developed countries.
  • Special role of science and technology : International business gives a lot of importance to science and technology. Science and Technology (S & T) help the business to have large-scale production. Developed countries use high technologies. Therefore, they dominate global business. International business helps them to transfer such top high-end technologies to the developing countries.
  • International restrictions : International business faces many restrictions on the inflow and outflow of capital, technology and goods. Many governments do not allow international businesses to enter their countries. They have many trade blocks, tariff barriers, foreign exchange restrictions, etc. All this is harmful to international business.
  • Sensitive nature : The international business is very sensitive in nature. Any changes in the economic policies, technology, political environment, etc. has a huge impact on it. Therefore, international business must conduct marketing research to find out and study these changes. They must adjust their business activities and adapt accordingly to survive changes.

Importance of International Business : 

The points below highlight the importance of international business.

  • Earn foreign exchange : International business exports its goods and services all over the world. This helps to earn valuable foreign exchange. This foreign exchange is used to pay for imports. Foreign exchange helps to make the business more profitable and to strengthen the economy of its country.
  • Optimum utilisation of resources : International business makes optimum using of resources. This is because it produces goods on a very large scale for the international market. International business utilises resources from all over the world. It uses the finance and technology of rich countries and the raw materials and labour of the poor countries.
  • Achieve its objectives : International business achieves its objectives easily and quickly. The main objective of an international business is to earn high profits. This objective is achieved easily. This it because it uses the best technology. It has the best employees and managers. It produces high-quality goods. It sells these goods all over the world. All this results in high profits for the international business.
  • To spread business risks : International business spreads its business risk. This is because it does business all over the world. So, a loss in one country can be balanced by a profit in another country. The surplus goods in one country can be exported to another country. The surplus resources can also be transferred to other countries. All this helps to minimise the business risks.
  • Improve organisation's efficiency : International business has very high organisation efficiency. This is because without efficiency, they will not be able to face the competition in the international market. So, they use all the modern management techniques to improve their efficiency. They hire the most qualified and experienced employees and managers. These people are trained regularly. They are highly motivated with very high salaries and other benefits such as international transfers, promotions, etc. All this results in high organisational efficiency, i.e. low costs and high returns.
  • Get benefits from Government : International business brings a lot of foreign exchange for the country. Therefore, it gets many benefits, facilities and concessions from the government. It gets many financial and tax benefits from the government.
  • Expand and diversify : International business can expand and diversify its activities. This is because it earns very high profits. It also gets financial help from the government.
  • Increase competitive capacity : International business produces high-quality goods at low cost. It spends a lot of money on advertising all over the world. It uses superior technology, management techniques, marketing techniques, etc. All this makes it more competitive. So, it can fight competition from foreign companies.


 International business refers to the performance of trade and investment activities by firms across national borders. Since the most conspicuous aspect of international business is the crossing of national boundaries, we also refer to international business as cross-border business. Firms organize, source, manufacture, market, and conduct other value-adding activities on an international scale. They seek foreign customers and engage in collaborative relationships with foreign business partners. While international business is primarily carried out by individual firms, governments and international agencies also engage in international business transactions.1 Firms and nations exchange many physical and intellectual assets including products, services, capital, technology, know-how, and labor. In this book, we are concerned primarily with the international business activities of the individual firm. 

While international business has been around for centuries, it has gained much speed and complexity over the past two decades. Firms seek international market opportunities more today than ever before, touching the lives of billions of people around the world. Daily chores such as shopping and leisure activities such as listening to music, watching a movie, or surfing the Internet involve international business transactions that connect you to the global economy. International business gives you access to products and services from around the world and profoundly affects your quality of life and economic well-being. The growth of international business activity coincides with the broader phenomenon of globalization of markets. The globalization of markets refers to the ongoing economic integration and growing interdependency of countries worldwide. While internationalization of the firm refers to the tendency of companies to systematically increase the international dimension of their business activities, globalization refers to a macrotrend of intense economic interconnectedness between countries. In essence, globalization leads to compression of time and space. It allows many firms to internationalize and has substantially increased the volume and variety of cross-border transactions in goods, services, and capital flows. It has also led to more rapid and widespread diffusion of products, technology, and knowledge worldwide, regardless of origin.

In practical terms, the globalization of markets is evident in several related trends. First is the unprecedented growth of international trade. In 1960, crossborder trade was modest—about $100 billion per year. Today, it accounts for a substantial proportion of the world economy, amounting to some $10 trillion annually—that is, $10,000,000,000,000! Second, trade between nations is accompanied by substantial flows of capital, technology, and knowledge. Third is the development of highly sophisticated global financial systems and mechanisms that facilitate the cross-border flow of products, money, technology, and knowledge. Fourth, globalization has brought about a greater degree of collaboration among nations through multilateral regulatory agencies such as the World Trade Organization (WTO) and the International Monetary Fund (IMF). 

Globalization both compels and facilitates companies to pursue cross-border business activities and international expansion. Simultaneously, going international for a firm has become easier than ever before. A few decades ago, international business was largely the domain of large, multinational companies. Recent developments have created a more level playing field that allows firms of any size to benefit from active participation in international business. In this text, you will read about the international activities of smaller firms, along with those of large multinational enterprises. In addition, where cross-border business was once mainly undertaken by manufacturing firms, this is no longer the case. Companies in the services sector are also internationalizing, in such industries as banking, transportation, engineering, design, advertising, and retailing.