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Internationalization refers to the increasing importance of international trade, international relations, treaties, alliances, etc. International, of course, means between or among nations (Daly, 1999). Globalization refers to the global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration (Daly, 1999). Globalization and the interconnections of the global economy have grown in an impressive way and a large part of this great development is due to a large number of companies that are operating in foreign locations.
People often make no distinction between the terms international business and multinational or global business because the words international, multinational, and global represent somehow overseas markets. However, this is not necessarily accurate because some businesses are international and refers to things that involve a relationship between two or more nations and some businesses are multinational or global that can be related to the entire world, without regard to country or geographical location.
When we want to establish a company internationally, we must first choose the location or the country where we want to grow our business and once we determine the country, we should use the SWOT analysis, which is a powerful tool that helps us develop our business strategy. The SWOT analysis stands for strengths, weakness, opportunities, and threats. For example, the legal system of a country is significantly important for international companies because differences in legal systems can definitely affect a country’s interest as a market or investment site. The law of a country regulates commercial practices, defines trade policies, rights and obligations involved in commercial transactions. The government of a country defines the legal framework within which companies do business. Therefore, the laws differ from one country to another (Hiray, 2007).
Another tool that I recommend is the use of the CAGE framework, which facilitates us to understand the cultural, administrative, geographical and economic part of the country where we want to expand our business. The biggest challenge in acting local is to understand the cultures. Therefore, one of ours principal word is to adapt to the local customs. The company must have some idea of a country’s history, geography, and environmental protection. The influence of history on behavior and attitudes and the influence of geography on markets, trade, and environmental issues are examined in particular.
Business professionals should keep in mind that change is not easy for humans. Many of us resist it into the process, and that makes it difficult for everyone else, but when we learn to understand others’ we improve our chances of making things better in an increasingly multicultural world. Business professionals are looking for ways to become more efficient, improve productivity, and expand their global reach while maintaining and ability to respond quickly and deliver products that the markets demand. International business executives understand the reality that this is a world of tariffs, quotas, and nontariff barriers designed to protect a country’s markets from intrusion by foreign companies.
In every country, specific cultures exist. In comparison, most businesses have a variety of different cultures because there are different people working within the company. People with the same religion, language, beliefs, and values share a culture. This, in turn, is shared with all types of people in the same cultural system. An examination is made of the art of managing people who are from different cultures, taking into account their different set of values, traditions, and ways of achieving various goals. Commercial or business tactics are applied and implemented differently depending on the culture from which they make decisions. Therefore, one should always think globally and act locally.
This is the extent to how people try to avoid situations where expectations and outcomes are not clear. It is situations where people feel threatened by poorly defined or ambiguous conditions and varies considerably among people in different countries. Business professionals with high uncertainty avoidance would tend not to break cultural rules even when they think it is in the company’s best interest to do so, and tend to remain within the same company for long periods of time.
There are so many important details to consider when you want your company to be part of international operations. For example:
• Ownership and form of the business organization
• The geographic location of the business
• Geographic area to be served such as country, countries, or world region
• Products and services
• Product adaptation needed to meet the needs of the foreign market
• Product differentiation to create competitive advantage
• Transportation Modes
• Pricing strategy: launch price, pricing through each step within the channels of distribution, currencies, exchange rates
• Marketing objectives
• Communication Objectives
• Market research
• Target markets
• Demand estimation
• Trade barriers
• Assessment of risk and key success factors
• Major competitors
• Promotional strategy
• Social media and publicity
The global operations have changed inevitably in today’s world due to the introduction of a new trading platform, online access, and technology. Being able to make financial transactions, production and services activities with a “click” of a mouse has increased the integration of the global business, disappearing frontiers and heading the world for an economy, political and cultural global integrity.
When we analyze the information technology being used in the world, it relates in a direct way to a country’s income. High-income countries are able to use the latest technology. Conversely, low-income countries continue using older technology, putting them in a disadvantage to the innovation of world economic activities. Global finance no longer involves few players, but many from various others contributing factors.
The introduction of new regulations, policymakers will want to know how less conventional policy tools affect financial conditions and the economy. Globalization helps countries integrate into the world economy and it gives them the chance to increase income. Conversely, globalization brings some economic issues such as income distribution, production, competition and information flaws among others. In emerging economies, domestic demand and social protection are playing a critical role. Based on the incentives applied to it, we will see a decrease in saving.
We find a set of standards and codes called “Ethics” when running a business but also when you are working with the values of certain societies. One of the benefits of executing a highly ethical operation is found in companies where their clients or consumers are loyal to the company. Its products or services based on the set of codes or ethical organization values it may accompany the company even if the company goes through stress due to some issues. For the most part, a consumer will remain loyal in buying products or services due to the company’s ethics history which makes it an advantage to it. Companies now and days give a great value to the ethic find in their organization. It is more than just making a profit by being ethical, but it goes further beyond that. In the recent year, we have seen companies reporting their acknowledgments not only on their financial, social, and environmental performances encouraging their ethical business conduct. On the contrary, business ethics may reduce the freedom of the company toward their goal in maximizing profits, but it will benefit a wider society. When a company complies with the business ethics will need to obey a series of laws, such as minimum wage, non-discrimination, and minimum health and safety standards among many others. Large organizations often encounter problems when trying to have all their employees to obey and work by the ethics of the company. Small companies will have better control over it saving the owner(s) a great of a deal of money in a lawsuit, non-compliances fees, attorney fees, etc.
Indeed, as a leader of a company, it is very important making the bright decision. It can be quite powerful when doing it for the huge impact that can have on the social, moral and environmental aspects not only on the company but also on their business ethics in general.
When we are making a plan to cross borders to expand our business outside the territory we know, we will find values and practices different from those of our country of origin, which we call ethical dilemmas. Ethical dilemmas are part of the cross-cultural understanding, which requires us to reorient our mindset, and most importantly, our expectations, in order to interpret the gestures, attitudes, and statements of the peoples we encounter (Carpenter, M. A. & Dunung, S. P. 2012). There is an important point that I want to mention and is that in some foreign countries practice religions different from our country of origin, in these cases the differences between religions can’t be confused with ethical problems. We should not focus on the fact that only ethical problems in companies should be divided into corruption and bribery. The ethical problems affect aspects in the areas of human resources, social responsibility, and the environment.
When you decide that, you want your business to grow and become internationally known, whether to create an extension of your products, adaptation of your products or a new invention of a product you have to understand the logistics. Part of the logistics that I consider important is to make a market segmentation that gives us an extensive and complete vision of how to use our efforts so that future customers accept our products or services. In the same way, we must develop a logistics for the production, reproduction, distribution, and sales of our products. In addition, we have to weigh the risk of going abroad and we need to apply the four Ps of marketing. Product, price, promotion, and place are the best way to reach international customers. Using the four P’s of marketing, we can obtain more and better opportunities for our business and obtain a greater impulse to expand our products or our services abroad.
When we decide that our company should enter the international range, we face many delicate situations and that is why we have to work to resolve the risk factors in our favor. The risk factors are not only economic or political. For example, we will always have the uncertainties of the governments of the countries with which our company is going to do some type of trading. The future can’t be clearly predicted for anyone. At this point, we must pay close attention to all the factors that evolve around the world and hope for the best. However, today are many countries that have been able to reduce their barriers, such as the reduction of export taxes that I believe that this is an important factor in making international trade less expensive.
- Daly, H. E. (1999). Global Policy Forum. Retrieved October 18, 2018, from https://www.globalpolicy.org/component/content/article/162/27995.html
- Leonard, K. (2018, October 17). What Are Ethical Standards in the Workplace? Retrieved October 18, 2018, from http://smallbusiness.chron.com/ethical-standards-workplace-11576.html
- Dunung, S., & Global, A. (2011). International Business. Retrieved October 19, 2018, from https://open.umn.edu/opentextbooks/textbooks/international-business
- Hiray, J. (2007, August 17). International business and legal system. Retrieved October 20, 2018, from https://businessmanagement.wordpress.com/2007/08/17/international-business-and-legal-system/
- Liston, P. (2017, February 15). 5 Steps to Reduce Supply Chain Risks When Going Global. Retrieved October 21, 2018, from https://www.inboundlogistics.com/cms/article/5-steps-to-reduce-supply-chain-risks-when-going-global/
- Collins, M. (2015, December 17). The Pros And Cons Of Globalization. Retrieved October 21, 2018, from https://www.manufacturing.net/article/2010/06/pros-and-cons-globalization
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