What Is The Impact Of International Business?
As globalization embarks world economies in its fullest form and removal of trade barriers between nations remain enforced businesses are seeking newer and better markets outside their local markets. These companies are carrying out business that is referred to as international business. The term ‘international business’ refers to all commercial transactions undertaken by either private or governmental organizations and take place in more than one nation (Daniels, Radebaugh & Sullivan, 2007). The international business covers both concepts of international expansion and international operations. By engaging in international business companies in addition to larger market seek out benefits such as limited liabilities, ease of banking, increased secrecy, lower cost of operations, tax advantage etc. This white paper delves into how international businesses have evolved over centuries and the ways in which it affects the economies around the globe.
International business has existed for many centuries where traders were involved in cross border exchange of goods and services. However it was in 1960s when multinationals became focus of interest mainly driven from increase flow of FDIs by countries such as US and UK in later 19th and mid 20th centuries. At present MNEs are common entities which are operating at the same time in different countries and are engaged in various businesses. They are managed through authority levels and can cater a large population through dispersed operations (Jones, 1996). The impact of different elements of the society on international businesses is intense and vice versa.
By far the most important impact of international businesses is the economic activity that they generate in nations. Especially poor countries which do not have sufficient capital to generate economic activity through industrialization and commercialization can rely on foreign investments from MNEs and even other governments. Furthermore, such countries usually have access to cheaper labor and sources which foreign companies can take advantage of in order to achieve cost advantages in their own local markets. This has been the case for China and India which have been able to fuel up their economies driven from technology transfers and establishing of representative offices and production sites by foreign companies. The positives of foreign investment also include those deriving from engagement of labor in local markets thus reducing employment and sharing of knowledge surely opens up new venues for local businesses. With standardization through international businesses innovation, productivity and knowledge sharing are common and contribute to the establishing both national and international standards for companies to compete (Nawrocki, 2005).
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