International Business and Globalization

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Category: Business and Industry

Date Submitted: 09/13/2012 02:59 PM

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Introduction: Trade is the biggest source of contention between the countries. The terms “globalization” and “International business” are often used interchangeably describe business activities across national boundaries, however there are some fundamental differences between the two.

International business refers to all business activities, private and government, that involves the transfer of resources, goods, services, knowledge, skills, or information across two or more national boundaries (countries). Usually, private companies undertake such transactions for profit. While governments may also undertake them for profit, it’s usually for political reasons. International business differs from a domestic business in that a domestic business is a business whose activities are carried out within the national boundaries. This distinction from that of domestic business is because companies must operate in diverse foreign environments and because they must engage in specialized types of transactions, such as exporting and importing and the conversion of currencies.

The international markets offer vast opportunities for firms with a product or service in high demand. When business can do this, it can achieve a very good return on investment and useful global operations. Selling to multiple markets allowed companies to diversify their business and spread their risk. Companies will not be tied to the changes of the business cycle of domestic market or of one specific country. Global companies also have access to new markets in new parts of the world. This can be important for a company that is aggressively seeking to expand its business or one that has seen a stagnation of its sales in its home country. A company that is facing stiff competition can open a new operation in a foreign country where there is high demand for its products and services. Consequently, goods, services and ideas produced in a certain part of the world are increasingly becoming available...