THE Nature AND Scope OF International Business PDF

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THE Nature AND Scope OF International Business...

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THE NATURE AND SCOPE OF INTERNATIONAL BUSINESS: AN ESSAY In the 21st century, the adverse effect and significance of globalization has affected everyone’s life as it became the major force in pushing economic success around the world. Because of this, most business ventures are now expanding their scopes and wanted to penetrate the international market. Catering the needs and wants of every nationality and offering something new to consumers has become the trend nowadays. When we say international business, according to Michael R. Czinkota, this refers to the transactions that are devised and carried out across international borders to satisfy the objectives of the individuals, companies and organizations. Based on his definition of international business, it can be said that international businesses are focusing on the global resources and sets their objectives on global business opportunities and threats in order to produce, buy, or sell goods and services around the world.

NATURE OF INTERNATIONAL BUSINESS 

International Restrictions- Every country around the world and its government wanted to protect their local markets and local businessmen that is why it became a factor for implementing restrictions for international business. Most government imposes these restrictions so that international business sector will have a hard time entering the local market and to give security to local business ventures. Restrictions are being implemented through trade blocks, tariff barriers, foreign exchange restrictions, and other international trade restrictions. This causes harm to worldwide trading that materially affects a country’s economy.

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Benefits to Participating Counties- Every country engaged in international business especially those developed countries who has the resources to penetrate the international scene are the ones being benefitted by international trading. As they expand their reach, they are able to gain local and international consumers that will eventually become their loyal buyers. These businesses will continue to operate until their products and brand becomes known. These circumstances bring lots of money to their country that makes their economy boost.

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Large Scale Operations- With the expansion of the business, their production and marketing also expands. International business caters both the local and international market that is why production scale is large in order to serve the demands of the consumers. This is the consequence of entering the international market. Businesses need to double their effort in production as well as in marketing. They need to capture the interest of international consumers so that their product will be traded and patronized.

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Integration of Economies- International business makes it possible to integrate different economies. International Business is also using the resources, people, and infrastructure of other country in order to operate successfully. One of its benefits is that it provides additional work for the citizens of the country. A downfall for this is that when international business faces crisis that may lead to bankruptcy and failure, it will affect the economy of the country it penetrated as well as to the global economy. In layman’s term, it has a domino effect.

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Dominated by Developed Countries- As stated earlier, international business is dominated by developed countries as they have the sufficient resources to expand globally. They have the means to produce large volumes of products and to market it globally. Developed countries like US, Europe, and Japan has expanded to most countries in the world by offering a high quality product at low prices. This is possible because these countries have the resource to have human workforce at a low salary. While developed countries continue to succeed and become rich, developing countries continue to become the consumers without actually expanding globally.

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Market Segmentation- International business operates after they have decided who their target market is through market segmentation. They analyze the preferences, likes and needs of consumers so that they will be able to offer a product that will capture the consumer’s interest. Through this, international business can now come up with the level of production and marketing with the assurance that there will be a return of investment.

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Sensitive Nature- International business has a sensitive nature as it is very broad and it also includes politics. When a certain country become rival with other country, every international business of that particular country will be affected as well as the entire economy. This may lead to economic downfall and both countries may suffer. That is why as much as possible, governments wanted to keep a good relationship with other countries so that international transactions won’t be affected.

SCOPE OF INTERNATIONAL BUSINESS 

Foreign Investments- This is one of the important scope of international business. This contains investment funds from the abroad in exchange of financial return. Some businessmen wanted to try venturing on something new that is why they take the risk of investing in international business. This is said to be risky as there is no assurance of return of investment but this scope helps every foreign business to operate.

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Export and Imports of Merchandise- Export and import become rampant in international business as its objective is to offer products that are new to the consumers. Through these transactions, businesses introduce their products to the international market and will eventually capture international consumers.

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Licensing and Franchising- International business is also open for licensing and franchising globally. Just like in the case of international fast food chains like McDonalds and KFC, through franchising, these fast food chains became really popular among the citizens which became the key for their local success. On the other hand, local fast food chain such as Jollibee was also able to enter the international scene as it allows its franchising globally.

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Service Exports and Imports- It is also referred to as invisible trade as it refers to intangible items. For example, tourist’s spots and breath taking views of beaches in the country can also be considered as part of international business as it captures the interest of the foreign tourists. The tourist’s goal is to experience the view and the services that is why they tend to spend their vacation in the country. It is still a business as the tourist pays for the services.

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Growth Opportunities- International business provides a lot of growth opportunities for both developing and under-developed countries. As the trading continues, they will gain profits through export and import that has material effect on the economy.

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Benefiting from Currency Exchange- According to an article, International business also plays an important role while the currency exchange rate as one can take advantage of the currency fluctuations. For example, when the U.S. dollar is down, you might be able to export more as foreign customers benefit from the favourable currency exchange rate.

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Limitations of Domestic Market- International business can take advantage of the domestic market especially if it is small for a certain country. They will try to capture the needs of the consumers so that they will try to explore the offer of the international business. This is an opportunity for the foreign business to take the consumers of the domestic market.

Overall, we can see that international business has significant effect to every country. It provides benefits as well as disadvantages. Global trading is now part of our lives. In the future, these transactions will continue to grow and for sure, it will have a greater scope. We should live up with the changes and come up with some ways on how to benefit from International Trading.

REFERENCES:

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International Business: Nature, Characteristics, Features (PDF). (2020, September 13). Retrieved December 13, 2020, from https://commercemates.com/characteristicsinternational-business/

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Scope and Importance of International Business. (2019, November 25). Retrieved December 13, 2020, from https://commercemates.com/scope-of-international-business/...