International Business and World Markets Essay Example | Topics and Well Written Essays - 1750 words

International Business and World Markets - Essay Example In their pursuit of international expansion, companies must overcome barriers such as language differences, currency differences, cultural differences, legal and administrative differences, and skill levels differences. International business is the process of integration and interaction among people and advancing of connectivity and interdependence of businesses and markets. Many small and growing companies have unearthed lucrative new markets abroad and are receptive to franchising, joint ventures or technology transfer, and licensing (Czinkota 2008, p.229). Globalization Drivers Several factors (internal and external) can be outlined as driving the development of a global marketplace. The factors can be outlined as market, environmental, cost, and competitive factors. Parallels within demand conditions across a number of countries facilitate the establishment of single global strategies. For instance, markets such as Europe, America, and the Far East manifest consumer groups that share matching educational backgrounds, lifestyles, income levels, aspiration, and utilization of leisure time. Cost Factors The avoidance of cost inefficiencies and duplication of efforts shape two of the most prominent globalization drivers. In most cases, a single-country population are merely not sufficient for a business to attain meaningful economies of scale Environmental Factors There are diverse factors that affect firms operating on the international scene. These factors can be delineated as incorporating political, economic, technological, and sociocultural factors. The selection of international market involves the interplay of both organizational and environmental factors. Environmental factors may entail opportunistic approaches, local market complexities, and domestic competitive pressures (Czinkota 2008, p.230). Environmental factors such as technological advances allow businesses to leapfrog over phases of economic development. Competitive Factors Global strategies are frequently necessary to safeguard competitors from attaining an undue advantage in both domestic and overseas market. In the event that a competitor manufactures on a global scale and thus attains global economies of scale, this may undercut prices in the home market. Discussion The principal factors that prompt both small and medium-sized forms to make their moves into overseas markets can be categorized as proactive motivations, or factors that explain why companies go global and reactive motivations that elaborate on why the firms have to do so. Expansion within a â€Å"demand-driven† paradigm demands a more intricate, active, and ongoing overseas commitment compared to â€Å"supply-driven† initiatives that highlight the optimization of supply chains (Anne 2007, p.184). The eclectic theory was an intellectual response to the rising role of international production and the multinational corporation within the world economy. There are three factors that outline th e international activities of multinational enterprises: ownership advantages, location advantages, and internalization advantages (Rugman 2010, p.1). Multinationals usually develop competitive advantages at home and then transfer the advantages to certain countries via foreign direct investments, which allow the multinational enterprises to internalize the advantages (Rugman 2010, p.2).