International Business and Globalization
Discussion Question 1 (50 points)
Define international business and discuss the advantages and challenges of globalization. Discuss three (3) advantages and three (3) challenges of an international business. (50 points) (A 2-page response is required.)
International Business and Globalization
The advancement in globalization has prompted organizations to involve in international trade to increase their profit margins through access to the global market. International business is primarily connected to any situation whereby the production or service distribution crosses the country’s borders (Cantwell, 2017). Globalization, the shift towards a highly independent and integrated international economy, creates numerous chances for international business. These aspects of globalization can occur in markets where purchasers are dynamic, and the trade barriers fail. Also, it can be perceived in terms of production by providing a company with easier access to products and services from other nations.
Globalization could be highly rewarding for developing corporates and a considerable benefit for the overall development of the international economy. It is often believed that increased globalization results in greater economic development for the involved parties. This is because it increases access to labor, jobs, and resources. Globalization provides all countries with access to a broader labor pool. Hence the developing countries experiencing a shortage of talented and knowledgeable employees could, for instance, import labor from other countries to kickstart their industries. Access to jobs is directly linked with labor. Through globalization, the growing countries can gain access to job opportunities in the form of work outsourced by developed countries (Bretos & Marcuello, 2017). Another advantage of globalization is attributed to the increase in global cooperation. For the existence of a globalized economy, countries should remain willing to work together. Therefore, increased globalization is often linked to the eradication of conflict. Finally, globalization has resulted in increased cross-border investments, which has improved the welfare of both developing and developed nations at the macroeconomic level.
However, such advancement comes with various disadvantages, including employee exploitation, employers’ legal compliance, and environmental concerns. Most organizations within developed nations have outsourced their production operations to developing nations. Whereas this is advantageous for the local economies within such nations, local employees are often exposed to increased levels of exploitation. Besides, global employers are required to hire individuals lawfully in all the host nations. It is a challenge in the various countries have different labor laws the employers must comply with, which cover certain aspects like working hours, termination rights, and amount and type of paid leaves (Bretos & Marcuello, 2017). Therefore, employers must be aware of all the labor codes of every jurisdiction where the workforce is based on ensuring compliantly employment. Unfortunately, globalization has negatively impacted the environment. for instance, the global transportation networks and increased market demand imply increased fuel use, contributing to higher greenhouse gas exertion.
International business has numerous advantages, including more job opportunities, enhanced risk management, expanding the target market, and increased revenues. Beyond the job opportunities available in a global trade career, the industry aids in generating jobs as firms expand their markets. As the market shares increases, the production and service abilities increase, hence more job chances for the working class (Obialar, 2017). Further, a large target market enables the firm to run production without the issue of overproduction since excess production is sold globally, thus, increasing its revenues. The global business provides chances for market diversification. By less reliance on a particular market, firms limit the potential risk linked to their core market. Despite the advantages, international business poses challenges like intense rivalry, cultural interference, and adverse economic impact. Global trade presents a leveled ground for competition, negatively impacting developing nations. Unless properly managed, international business impedes the growth of developing countries. It presents a scenario where one nation can impact the economy of another. Also, large-scale exports hinder the industrial growth of importing nations, which, in turn, negatively impacts their economy. Overall, cultural values and heritage are different in all nations; hence various components would not be appropriate for the nation’s traditions, environment, and culture. This often results in unwanted fashion promotion, which is always created as a cultural exchange.
References
Bretos, I., & Marcuello, C. (2017). Revisiting globalization challenges and opportunities in the development of cooperatives. Annals of Public and Cooperative Economics, 88(1), 47-73.
Cantwell, J. (2017). Innovation and international business. Industry and Innovation, 24(1), 41-60.
Obialar, C. (2017). Advantages and Disadvantages of International Trade, 1.4. Retrieved, 2(18), 2018.
