The level of internationalisation around the globe has grown throughout the years, with advanced technologies the ease and ability to work with foreign countries has also grown. However, firms do not simply interact with each other with no outside party involvement; the government can be seen to play a large role in conducting international business. Governments continuously have the responsibility to act in the manner that they believe is best for their nation; this includes decisions regarding protectionism, which may serve to aid domestic industries but simultaneously hinder international business. It can be seen that governments do not always act in their nation’s best interest and are corrupt which can serve to increase the risks and costs of entering an international business environment. While these are examples in which the government makes international business difficult it can also be seen that the presence of a government is instrumental in creating international business effectiveness, whether this be through their legal system or from trade agreements. This makes the role the government plays paradoxical; as their involvement generally increases the risks and costs of firms seeking to internationalise, whilst simultaneously playing a significant role in creating international business effectiveness. For firms seeking to engage in international business, government intervention may increase both the risks and costs they undergo. With liberalised trade, firms
When governments amongst nations conduct in international business, it exposes them to increased risks and costs through unfair trade and bribery in order to obtain a competitive advantage or power. Mercantilism explains why the government intervention of international business increases the chances of these risks. Mercantilism is the theory that explains, the government will maintain their economy and trade to promote their own domestic industry at the cost of the other country leading to unfair trade (Pettinger,2016). As all governments will not play by the same rules, there is an increase in risks such as unfair tariff policies or bribery in order to gain a competitive advantage. In fact, many governments across nations will use these unfair actions to gain an increase in power. Hill (2015) states that nations like China are striving for a more neo mercantilist policy (a more modern theory of mercantilism where economic power is the equivalent to a trade surplus) to gain a trade surplus. During most of the 2000s, their exports have been increasing whereas their imports have not grown because they have been limited by an import substitution policy. While China is able to benefit from the trade surplus, it is at the cost of another nation where the money that will be paid for those imports will decrease. Therefore, government intervention in international business increases risk like unfair trading to gain a competitive advantage. The government also increases the cost of
All countries in the world have various political environment and regimes. Political systems differ in terms of the governance, power and the rule of law. A political regime can be defined as structures, activities and processes by which given countries in the world govern themselves. Political systems can be based on either collectivism or individualism. It is essential for business to look at a country’s political environment as a vital criterion in venturing or expanding the business or company to that country. This is because political systems differ and each has its own form of governance that impacts a business in terms of its growth. International companies carry out international manufacture and activity in that they
The end of the Second World War showcased a devastated world with the former economic powerhouses of Europe in disorder. In contrast the United States of America emerged as the global economic powerhouse. America's aim was to reconstruct and establish a post-war global order that cemented American hegemony. This essay will argue that revolving global reconstruction and development around the surpluses of the United States led to the most golden period of capitalism, where growth in both economic and social spheres was unprecedented and is unlikely to be repeated. The stability and effectiveness of the Bretton Woods institutions and the Marshall Plan helped produce massive growth that lifted the global economy into a full-fledged recovery, away
Throughout the semester we have touched on a multitude of different issues in Global Business. From monetary systems and how they have changed over time, to how different regions of the world have produced diverse cultural preferences. Even after touching on as interesting topics as these, nothing has come close to the intrigue of Government and how they can affect business in many ways. The many different ways that government can intervene in a business, affect import/export numbers via taxation, and much more will be discussed in the following paragraphs. The underlying question that this paper will answer is, how do the actions of the United States and United Kingdom affect global businesses.
The ability of corporations to interact with the different governments is a very important attribute to possess because of the government’s power over corporate opportunities, and the role that governments play in the shaping of competitive environments. The business-government relationships are regulated in three areas; (1) anti-trust regulations (including ‘mergers and acquisitions, predatory pricing, exclusive dealings, price discriminations, etc.’) that are meant to ensure the existence of competitive markets. The applications of anti-trust regulations also create opportunities for corporations to help shape governmental outcomes, (2) economic regulations which are industry specific regulate policies dealing with costs, productivity, and licensing, etc., and (3) social regulations which involves ecological laws, and occupational safety and labor issues. Federal legislations can have powerful impacts on the
Six months ago, Antiques R Us (a Canadian corporation) entered into a contract with Yankee Antiques (an American company) to purchase “a desk used by George Washington himself after his retirement from the Presidency”. The sum of $500,000 was to be paid to Yankee Antiques after 30 days of
(3) What are the four caveats exporting SMEs would be well advised to observe when crafting their export strategy? Discuss.
In this sense, the political side of international trade is a very important one. For example, what is good for General Electric – a leading US corporation - must be good for the US, but not necessarily beneficial for other international industries (APEC Branch 1999). In this sense, the needs of General Electric are favoured by the US Government, who in order to protect this leading corporation of theirs manipulate trade barriers so that countries competing with the US, cannot profitably export the same goods General Electric sells.
Krom Bop-A-Lee’s experience in Bombay, India is undoubtedly a common one for those from First World countries unaccustomed to the relatively poor working conditions present in many parts of the world. As Westerners, many luxuries are taken for granted, and the absence of these luxuries can have a profound impact on one’s moral and ethical foundation.
Throughout history it is a proven fact that many governments try to keep certain trades protected. Unfortunately, to their dismay, this is only a hindrance to their country. Governments often times see foreign companies as taking away from their economy and want to bar them from being able to compete in the market. Competition between local and foreign companies will prove to be a benefit, either the local
Historically, governments have implemented policies that increase the cost and risks of doing international business. This was, at the time, considered sound economic logic, that is, to protect a country’s own industry from international competition. Mainly via imposing tariffs on imported goods, governments would signal their intent to protect the local economy. As economic literature has continually developed over time, the creation of a more open international business market has become relevant for all governments across the world, who now play a significant role in creating international business effectiveness, as evidenced by an uptake in WTO members building trade-promoting agreements in recent decades (Kohl, Brakman, & Garretsen, 2016). What was once seen as a threat to economic prosperity, has in fact turned into an enticing source of economic growth. One may consider the paradoxical nature of such a transition, given these once protectionist governments are now favouring a free trade movement. However, for a paradox to occur, conflicting arguments must exist concurrently, and it is the purpose of this paper to argue that an evolution in economic theory is responsible for the shift in government policy. In doing so, an exploration of the ways by which governments have historically increased the risk and cost of doing international business will take place. Moreover, the economic theory responsible for the philosophical shift made by governments to now support
International business is incredibly crucial as it contains a huge and growing percentage of the world’s over-all business. It is not something that can be ignored, because almost every company; whether the size of it, is affected by international events and its
Several transactions occur every day in the international landscape and these are the special focus of the International Business. There are different relationships between companies, governments, and customers that shape the way business are conducted and challenge the strategy when a new market is going to be explored. There are two common activities that Multinational Enterprises MNEs perform: exports and imports, and foreign direct investments, these activities set a framework of regulations, policies, and economic considerations that vary according to the region or countries where MNEs act.
With the obvious growth of technology in what seems to be a shrinking proverbial planetary topography, it would appear as though we already live in a world dominated by global business. To some extent, this is true; however, the general population fails to realize, whether it be due to its own naiveté or credulity, that the business world is only at the brink of realizing the new capacities in which all undertakings may be handled more efficiently or cost effectively if it is done with a global perspective. As with all new potential work systems, there are many obstacles to be hurdled. These are challenges that will not only be faced by business leaders and corporations, but also by the self-employed,
Research Project Part A: Research Country – Company – Product – 50 points (1400-1800 words)