Conditions that have led to global market development
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Published: Mon, 5 Dec 2016
The development of international or global market itself is an interesting historical sketch that details all the relevant aspect of the developmental phase that have been going on since capitalism and the concepts of it took centre stage in redefining the way people do business across international borders and the course of industrialization that shaped and changed the facial outlook of global economic process.
Though industrialization at its nascent stage originated in Europe, however; the latent force of commercialization or to say global commerce and international business stem from US in particular post world wars era. What is particular to the development of international market in the early part of 1990s or to say in the 20th century can be laid emphasis to the notion of growing influence of USA and its democratic capitalism. And the process of industrialization in the face of growing trade, commerce, also marked a way towards internationalization or the development of global market, which economist have often termed as globalization and its phenomena.
In all fronts, there is no denying the facts that USA has been a major influence to the development of international market. One pertinent fact is the changing face of US business environment notable in the early part of 1990s. Add to it, the staggering $16.3 trillion in investment in the US alone speaks volume about the normative forms that conditioned the origination and development of international market.
Moreover, post world war era, people affluence grew, so does the demands for goods and services, which are increasingly difficult for domestic market to sustain or to meet the demands. In that sense, international commerce and cross-border trade became the norms. Apart from that apparent fact that account to USA influence and growing dominance in the expansion of international market, the origination of World Trade Organization (WTO) in that period, that is to say during the nineties also have been prominent to mark the development of global market. In addition, the trend that is also catching up during the early part of the nineties especially business trends can be looked to the pertinent case of free trade agreements that opened up a way for cross-national trade and business. Specific to these types of condition, acceptance of free market system among developing countries added to the steam of international market and its conditioning.
Explain the four risk of International Business?
Business as we know is bounded by risks, given the nature of international business environment itself. One peculiar face of business risks is the uncertainty factor, and when it comes to international business it is rather looked upon as the primary risks elements in general.
Apart from uncertainty, there are other things as well that seems risky. And the more prevalent risks elements to international or the primary factor of it can be laid emphasis to the following:
Political risks: There is no denying the fact that international business in any circumstance is bounded by political risks. Political risks can be understood as the factor that makes up the political features of a country. Thus, political climate at times have a greater force to play a part in international business. Take for instance, political uncertainty itself. That means when political climate is rather stable, international business also take the same course. However, most of the times political stability is rather an exaggerated term; given that there can be no sure shot method to predict nation’s political makeup, or to say the nature of its stability that hangs in the edge. As a matter of fact, with lesser political stability, the impact it have on business is also paramount, which in due course can change the direction and strategic makeup of business. Thus, political risks are one primary factor of international business.
Technological risks: As we are aware, technology and the marvel of it have brought along a bundle of benefits, which have took the societal developmental phase one notch above the ground. Add to it, technology and its advancement is also ever increasing, which means each day and in the cycle of economic process, technological domination and its impact in international business is felt with greater force. International business are thus faced with the abject notion that less of technological awareness or outdated technological application in international business can hamper the way things work or are predicted. Thus, the risky elements can be looked to depreciating cost factor that technology posed or the security to international business.
Economic Risks: What define economic risks are the financial elements that may its way to it. In simple sense, it can be broadened to the changing face of international business itself, which also defines the investment factors or nations inability to meet its own financial obligations. With the idea of international business and increasing trade barrier or free market trade can have a dominant role to play its part in international business cycle and thus, it comes as a risk.
Socio-cultural risks: Civilization is always in a stage of development, and one factor that socio-cultural forms take its course can be laid emphasis to the notion that no particular nation and its culture are dormant. That is to say, cultural difference is wide spread, and when that element is accounted to international business, the marketing process also is posed with the uncertainty factors. Thus, organizational operational and strategic process is also challenged in such environment. Thus, marketer needs to be way ahead in understanding culture and society itself, which we can bracketed as socio-cultural risks.
Why do firm Internationalize?
The simple facts remains that firm internationalize for many reasons or the other; be it, profit motive, the expansion to new horizon, exploring and tapping new markets or for reasons less known, that is to say for competitive advantage or labor mobilization and last but not the least, the cost factors.
Moreover, by going international, firm can also take centre stage to reaps the benefits of global exposure, and the opportunity cost that can be reaped from international business is also rather more in a sense that diversity is also exemplified, plus the means that internationalization provides towards new markets beyond national boundaries is also what’s excites and interest organizations in going international. Add to it, supply chain and its management is also more broadened when firm indulge themselves in international business. Thus, the above mentioned facts in brief list some of the factors and the notion as to why firm internationalize.
What are the different participants in International Business? Write in detail about the MNE’s, Small and Medium Sized Enterprise, the Born Global firm.
International business and its arena is a bundle of flourishing economic activities and the cycle of its repeats day in and day out. The simple facts are that without corporations and business houses, plus participants, economic activities are rather on the back foot or to say, it makes no sense at all. It is common knowledge that global economic process today defines the notion as to what constitutes participants in international business. Thus, the different participants are the following:
Distribution channel intermediaries
Agents or contractors, etc.
Thus, these participants in international business forms the cycle of economic activities carried out in the background of each one participants dependent upon one another in international business scenario.
Multinational Enterprise: Multinational Enterprise defines organizations that have set shop in more than one particular market, where its business expose is international, with a global aspirations and goals. Add to it, Multinational Enterprise also details the object of its ownership, which means that that part of the ownership is either owned by parties or more than single ownership take course. Moreover, Multinational Enterprise also posits special characteristics that mirror forms of nationality mix among its staff and managers. Hence, very often Multinational Enterprise is also known as MNC (Multinational companies). The best example can be looked to subsidiaries firms or American firms with their bases in foreign nations where operations and organizational control are decentralized, and the marketing strategy also is rather different from parent company or the likes.
Small and Medium Enterprise: As the term denotes to, small and medium enterprise are organization with a business object and turn over that is rather small. And most importantly, employee counts are also small in numbers and counts, let say 20-30 employees for the starts. Add to it, company assets are also small in comparison to global firms or MNE’s.
But that does not mean that such organization cannot go global, given that globalization and notion of free trade provides a formidable leverage for small and medium sized enterprise to go global and can be looked upon as a competitor.
Born Global Firm: Born global forms and its concepts is a rather mostly used term in the contemporary adage to mean the process of internationalization and its influence that is taking shape in local or national organizations with a potentialities to go international in due course. Such organization can be looked upon as startups, with lesser assets and turn over.
Why do firms internationalize?
The simple notion why firms internationalize can be laid emphasis to the globalization and its influences. The channelizing networked partnership possibilities, the opportunities in such a scenario, or to position themselves and influence partners or subsidiary firm who are either based in foreign shores also constitutes some of the sole components why firms internationalize. The idea of comparative management is also one main reason.
What are the Societal Consequences of Market Globalization? Explain Positive and Negative Consequences?
As we can observe in and around the materialistic world that we live in today, commercialization and international business at times have provided a bundle of baggage or paved a way towards progression and development in economic sense of the term. However, consequences also can be translated and laid emphasis to the good the bad and ugly features that market globalization have brought along. Nonetheless, the economic reality and humans wants also should be acknowledged, and the fact that no nation is self reliant and self sufficient. Moreover, in order to meet the ever increasing demands for goods and services, global corporation fits the bill accordingly in facilitating the societal needs in one aspect and form of life in the societal sphere.
Hence, the notable face of the negative societal consequences from a comparative and contemporary context can be laid emphasis to the following:
Environmental or Ecological consequences.
Depreciating and depleting natural resources reserve.
The question of sustainability
Climatic effects that have worsened.
The positive effects of market globalization are:
Avenue for employment generation
Facilitates economic cycle
Good and services are made available
Socio-political growth, etc.
Thus, it can be argued that the societal consequences or the effect of market globalization translate itself to have redefined the way people do business in simple sense of the term, which can be look as a positive aspects. Economic demands in the regional and global economy taken together are ever increasing, and market of globalization facilitates in meeting these demands.
In that effect, more of the resources are utilized. However, natural resources and the likes also deplete with increasing use, plus scarcity of resources, which is a known fact add up to the compounding negative societal consequences that is generated out of market globalization, which is pointed above.
What are the firm levels Consequences of Market Globalization?
We can’t deny the facts that firms benefits tremendously from market globalization and its effect. Thus, the phenomenon of market globalization has added an object that can never be thought of or imagined without market globalization in the course of civilization.
Thus, the positive features can be addressed to the following points:
Marketing process is impacted
Business process and its management also exudes international outlook
Diversity of business process
Cultural mix and global awareness
Production tactics and its cycle also is impacted
Standardization, quality or products and services.
And finally, market globalization means a widow of free trade barrier for companies across international borders.
However, when it matter to negative aspects of globalization and its impact on firms the following are some of the pertinent facts:
Competition is also greater among firms due to market globalization and its consequences.
Barrier to entry and exit in a particular market or industry also posits one of the negative consequences of market globalization.
Resource utilization also often goes above the shelf
Thus, when it matter to firms and the level of consequence that stem from market globalization also translate itself into the negative and positive features as detailed above.
Explain the three types of participants in International Business?
The three types of participants in international business constitute the following:
Focal Firm: What defines focal firm as one participants is the fact that, focal firm itself is looked upon as an initiator to international business in real sense of the term. It means that focal firms constitute Multination Enterprise, Small and Medium Enterprise, where the actual economic and production process take shapes. Thus focal firms are looked upon as the centre and stage of international business and its cycle at the primary level.
Distribution Channel: Distribution channel intermediaries and their roles are consumed in facilitating the distribution cycle common to international trade and businesses. In simple sense and meaning of term, distribution channel intermediaries defines organization that specializes in the distribution channel, that is to say, logistic support, marketing etc, which are the sole constituent of distribution channel intermediaries.
Facilitators: Third is the facilitators, and includes firms and individuals, where the object of their roles and functions as participants in international business is broadened and exemplified to facilitating legal advice, financing and in between the interrelated business transaction is made possible. Furthermore, participants also can includes, licensor, joint venture partners and the likes of foreign distributors, foreign agents and all in between.
What are the common characteristics of Born Global firm?
The common characteristics of Born Global firm can be laid emphasis to the following:
Bounded by national boundaries with a scope for internationalization
Expertise services and products in regional market
Start-up corporation or small and medium sized organization
Though market is defined in fixed national boundaries and operations is also often constituted and headquartered in one particular location, however; that does not means that their role in globalization and its economic process is limited in a sense.
The idea of born global firm and in characteristic in particular can be laid emphasis to the object that internationalization and its impact is a favorable foreground for born global firms. That is to say, born global firms are very likely to make way and expand its business scope beyond the national boundaries, as and when it senses the opportunities knocking its doorway.
Hence, born global firms defines regional organization that have set up shop in foreign shape simply by assimilating the idea of acquisition, partnership and creating subsidiaries, etc, in foreign location, however, are headquartered in regional market, or in location where they originated. Thus, the trends in the face of globalization initiates Small and Medium sized corporation to explore such domains that open up new horizon to do business in the international arena to tap the potentialities of international business.
What are the Foreign Market Entry Strategies of Focal Firms? Explain in Detail.
Foreign market entry strategies of Focal Firms is rather a complex features and step wisely strategies initiated by organizations with the sole purpose to tap the opportunities of internationalization in the most beneficial course. What defines focal firm’s foreign entry strategy can also be laid emphasis to the notion that going international is no child task and requires an extensive attention to details and understanding the peculiar facet of international business environment.
In that context, the development of strategies when it matter to focal firm entry in foreign shores “take into account the involvement in greater degree to what defines international management itself and the creation of networks that should assist the firm movement and its entry into foreign shores smoothly. Thus, focal firms bring internationalization right at the outset by establishing a connected links or channel of networks and building relationship with firms in the foreign shores. Thus, strategy in such course is at a nascent stage that does not involve control of production or the likes of direct intervention into the other firm, especially in matter of internal control. And most importantly, relationships that are building up with foreign firm take its course and position themselves from the notional boundaries and all form of exchanges also take shape in that forms and to position itself in different network or the moves towards continuous development processes that should also aid and future action to take shape in the most feasible forms.” (Ford, 2003, p. 189)
In short, strategy of focal firm entry into foreign market can be classified as follows:
Entry is indirect, where its course takes shapes initially to build a network channel or a relationship that should get in the way for smooth transition and movements in the future.
Strategies most importantly come as a matter for influence and to drive home the idea of foreign market entry in the most feasible means.
Creating a relationship channels that can assists in future course of actions.
Position themselves in foreign shores and also establishing new contacts and the likes.
Thus, these are some of the strategies that covers up, or some aspects that detail the normative standards, when it matter to foreign market entry strategies of Focal Firms in its discourse.
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