ACTIVITY 1
INTERNATIONAL BUSINESS AND TRADE
ACTIVITIES/ASSESSMENT:
1. Differentiate Globalization from International Business. Discuss key points of their
advantage and disadvantages.
Globalization encompasses larger scope of business-oriented political agenda (issues and
concerns) on the entire world. It aims to connect economic and financial institutions all across the
world, lowering artificial barriers to products and services trade. Few companies or brands are
global. A global company invests and does business in the countries where it chooses to do
operations. It typically has subsidiaries in a variety of countries, resulting in hundreds of locations
throughout the globe. It also has central headquarters where they make decisions for driving the
business, and the same product(s) are offered in every country, regardless of local culture and
tastes. The ultimate objective of globalization is to create a level playing field or fairness in the
same set of rules so that manufacturers and factory workers, for instance, Vietnam, can compete
with American workers in the production of laptop computers and running shoes. On the other
hand, international business refers to business deals that involves exchange of goods or services
for payment which take place between two or more nations. These transactions comprise importing,
exporting, tourism and transportation, licensing, franchising, turnkey operation, management
contracts, direct and portfolio investment that might take place between private companies and
government agencies and involve many countries. However, it does not have any other investments
in these countries. Large number of countries are international. All of the firm's functions and
headquarters remain in the country of origin, and the corporation has no overseas branches in any
of the countries with whom it does business. It performs global manufacturing and supply chain,
management and other managerial functions. The major objectives of international business
include sales expansion, resource acquisition and risk minimization. Global and international
business are distinct in that international trade does not require globalization. International trade
can exist without globalization, but not the other way around. Monopolies, tariffs, government
involvement, and intellectual property theft are all constraints to a worldwide level playing field,
but none of these prevent international trade.
Globalization has provided numerous benefits to everyone else. Globalization implies the
best possible use of resources, with excess resources being sold to other countries and deficiency
resources being acquired which ensures overall economic growth. Every country contributes to
global GDP growth as a result of globalization. Globalization is a key mechanism that helps
countries to combat poverty and improve the standard of living of the people. Using advance
technology minimize cost, time, and efforts as we communicate. With the access to the latest
technology, the countries can provide products to its countrymen at affordable prices. Following
technology advancement, globalization always provides we better services and easy access to the
internet. Due to the technological advancement and its transfer throughout the globe helps to
improve country’s infrastructure. Countries can also build foreign exchange reserves owing to
international financial flows. Above all, globalization promotes market expansion where it allows
domestic businesses in going global. However, globalization has some disadvantages. By
expanding specialization and commerce, globalization has the potential to exacerbate global
inequality. It can also increase unemployment rate as the demand, for instance, for employees in
developed countries is very low so with the emergence of global economic crisis, their jobs are at
risk of losing. The trade imbalance has been occurring as developing countries are so much
dependent on the developed countries in terms of import goods, but their export capabilities are
lower than import. As a result of globalization, the pace of industrialization is increasing which
fosters economic prosperity but also harms the environment.
International business offers great advantages such as product flexibility, less competition,
protection from national trends and events, and learning new methods. When existing business
market globally, with the right amount of research and investment, they can offer a much wider
range of products that may lead to a greater demand abroad. In the global market, international
businesses have less competition. When they have access to high-quality versions of things that
are superior to those in other countries, it might be advantageous. If you can find an international
market that has been buying an inferior product, you will have less competition. Having a presence
in many countries can assist you in riding out the winds of trends, styles, and fads, giving you time
to reassess your strategy. International businesses are less vulnerable to events in any one country.
Having a presence in many countries increases immunity to trends, giving you time to reconsider
your strategy. Furthermore, a natural disaster in one place might impact commerce, but can be
adjusted by focusing to sales efforts in another location. Moreover, international business
expansion may lead to discovery of new learnings and may apply this knowledge to other markets.
International business reaches new costumers, spreads business risk, accesses new talent, amplifies
the business brand, secures foreign investment, lowers costs, increases immunity to trends, and
improves consumer confidence.
However, there are a number of drawbacks to international business that must be addressed
if your business is to be genuinely successful in these markets. Every nation has its own tax,
employment laws, considerations for business registration and trademark, and papers that must be
filed in a foreign language. Various rules, regulations, and customs processes followed by various
nations have a direct influence on import and export commerce. International businesses also face
logistical considerations such as communication and the delivery of physical commodities between
locations. Shipping across countries might take a long time and result in delays. Furthermore, not
every country has the same resources and infrastructure, so it's better to avoid making assumptions.
Language is still one of the major disadvantages of international business. Different languages in
different countries create barriers to establishing business relationships between different countries.
A time zone gap between your sites is another consequence of international business, and it's
necessary to minimize inefficiencies. The value of domestic currency in relation to target location
at any one time can also have a major impact in the company's performance. A local customer who
fails to pay their account can cause major problems, but it is even worse for international
consumers, as there is no assurance of recovering outstanding debts from non-paying customers.
Political events can also affect international business dramatically especially in a target country
that has the same political environment as your own nation. Lastly, international business could
potentially involve expensive market research to understand the needs of a completely different
culture.
2. Identify the following if whether it is Globalization or International Business.
International Business
International Business
Globalization
International Business
International Business
International Business
International Business
International Business
Globalization
International Business
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PepsiCo.
Ford Motors Co.
NBA.
Google
Minecraft
Philippine Airlines
Department of Labor and Employment (DOLE)
Pfizer Corporation
Roman Catholic Church
Louis Vuitton