International Business in Practice - Coursework Example

International Business in Practice Name: Course: Date: International Business in Practice Case Study Pinnacle fresh company deals with the buying and selling of fresh produce. Its business premises in Australia buy fresh produce from farmers in Australia when the seasons are on. When out of season, the company sorts the fresh produce from suppliers in other countries to replenish their stock and to avoid shortages. An efficient inventory control system ensures the continued operation of the company all year round. It stocks fresh products such as asparagus, garlic, onions, stone fruit, citrus fruits, kiwi fruits, and table grapes. Pinnacle fresh ensures continuous seasonality of their products to avoid losing loyal customers. It sells its products to local consumers as well as exporting them to international consumers. This company offers a perfect demonstration of the operation of international business in Australia. It does not only deal with exportation of produce to other countries but also imports some of its produce. The large amounts of its transactions also help in further demonstration of the practice of international business. The simplicity of its operations also enables a comprehensive analysis the company, its products and eventually its transactions. Pinnacle does not only handle a variety of goods but also offers its stakeholders a variety of services. Such services include storage, distribution, quality control, goods inspection and clearance services among others. The choice of this company therefore depends on the relevance of its operations to international business and its offer of variety transactions. Comparative Advantage Comparative advantage theory suggests that a country should specialize in production of the goods and services that it can most efficiently produce. It therefore results from a comparison of more than one country. Mere efficiency in production of a product does not offer the country a comparative advantage (Adekola & Serge 2012). This efficiency must exceed the efficiency in production of the same product in other countries. Australia enjoys a comparative advantage in the exportation of various commodities such as fresh produce and mining resources. This comes as a result of various factors that lack in most nations and that determine the success of production. The factors of production include labor, capital, entrepreneurship, and raw materials. The mining booms experienced in Australia over the years led to the increase in population in the country. This resulted from migration of people from various countries seeking to invest in the mining industry and other subsidiary industries while others sought after jobs. This made Australia a multicultural nation with a high population that rises consistently. A high population has its limitations but also offers a country various advantages. It ensures high demand for the locally produced goods since the people act as the end consumers. Another advantage involves the provision of a wide pool of labor. Readily available labor increases the production capacity of a nation. Natural resources offer Australia an upper hand in both mining and agriculture. The fertile soil and landscapes offer a thriving ground for farming. Availability of a large portion of land suitable for farming with adequate rainfall boosts the agricultural production in the region. The climatic conditions in the country offer an enabling environment for farming. Most agricultural farm products thrive in Australian soil. Irrigation schemes also enhance agricultural production in the region when the rainfall level lowers. Proximity to the market for farm produce also offers the agricultural sector a great boost. This comes because of proper infrastructure installed throughout the country (Dunning 2000). The Pinnacle Company takes advantage of the comparative advantage offered by the country’s position. Its operations run throughout the year since local producers avail the agricultural produce. Local farmers greatly contribute to the successful operation of pinnacle. Affordability of the produce lowers the cost of the produce and enables strategic pricing of their products. The Australian population also offers a ready market for the farm produce since pinnacle operates various local distribution channels. These channels enable the movement of goods from the company to the consumers and from the producers to pinnacle fresh company. The company offers brokerage commissions to brokers who deliver farm produce to the company. Proper communication channels between the company’s workers and farmers ensure the farmers provide products of high quality and at appropriate times when required. This produce undergoes various tests before acceptance into the company’s stock. The company operates a warehouse for the storage of products from farmers. The protocol requires thorough inspection of the goods to ensure high quality produce enter the storage facilities. The produce obtained from the farmers attracts many buyers due to its high quality and uniqueness. This is due to the climatic conditions in the farming regions of the country and the fertile lands. The transport system enhances the transportation of the produce from the farms to the company’s premises without any risk of damage. The good reputation offered by Australian agricultural products work in favor of the company’s sales. The international market embraces the firm’s products since the company operates a large numbers of deliveries. Globalization Globalization refers to the close integration of people and countries across the border of national boundaries. It emerges from the lower costs of transport and communication and the elimination of artificial barriers to free flow of goods, services, knowledge, and capital (Rugman & Francis 2002). Globalization leads to great levels of interdependence, influence, and integration. It therefore results in the social and cultural influences between people of different nationalities. Effective communication has facilitated the interaction of various people across the national borders of various countries and has rendered the world a global village. Globalization offers explanations to the rural-urban migration in developing nations, low wage rate for workers and huge profits for western nations. Technological advancements boost the communication channels hence promote globalization. Communication technology facilitates the running of business both locally and internationally (Hambrick & Chen 2008). International business operates across the borders of the various nations involved. This means that the transactions involve less physical contact of the parties since they cannot travel all the time to transact. The internet specifically offers businesses a platform to market their products to customers across the world and communicate with them. The increasing rate of foreign investments provides a measure for economic globalization. Foreign direct investments flow mostly across industrialized nations. In international business platform, the firms expose themselves to global forces of demand and supply, international market competition, and political environments in various countries. The interests of stakeholders also experience significant amount of influence from these factors since the business no longer confines its operations to the local borders. The survival of a business in the international market therefore requires vigilance and requires the firm to keep up with the changing trends. The changing social, cultural, economic, and political environments in various countries significantly influence what, where, when and how the business sells its products. The pinnacle fresh company experiences significant influence from the state of globalization. It deals with customers across the world and hence needs to consider the needs of customers in the foreign market. Communication holds the key to the success of any business including pinnacle. Pinnacle embraces the changing trends in the communication technology to communicate effectively with its stakeholders. An active website ensures that the customers receive information on the products and services available for sale. This information enables them to make a choice on the products that suit their needs best. The customers also make enquiries about the products and receive immediate feedback from the company’s employees. These enquiries enable the business assess the level of satisfaction derived from their goods and services. Negative responses offer guidelines to the organization on areas requiring improvement. The customers make orders online for the company’s products making the process of placing orders more efficient. It speeds up the process and eliminates the strenuous queues and long waiting hours for responses. The presence of agents in various countries facilitates the transaction process. The agents act as intermediaries between the company and the end users of its products. Strategy, Production and Logistics Production involves turning raw materials into finished goods for consumption or for use as intermediary products for production. Production only becomes effective if the finished products reach their users (Dlablay & Scott 2010). A firm therefore needs to device channels through which the final products enter the market and eventually reach the end users. In international business case scenario, the channels involve the transportation of commodities from the firm’s premises to the airport, into the recipient country and finally to the final consumers. The process involves an elaborate procedure involving various legal procedures. Pinnacle fresh company employs the total quality management system (TQM) through which it ensures control of quality for its products. The personnel conduct Inspection procedures for the farm producers brought in by suppliers. This checks the condition of the products and their quality. In the agricultural business, quality forms a major part of the marketing strategy. Quality of products ensures loyalty from the customers and ensures a continuous flow of income into the business. Consumption of agricultural products however also demands high quality and health standards for them to qualify for human consumption. TQM enables the company identifies defective products and set them aside from the good products. This prevents transmission of the defects especially diseases to the good produce (George et al 2012). The European Union requires the certification of quality through the standards of ISO 9000 in order to operate in the European market. Pinnacle meets this requirement hence operates in the European market where most of its customers access their commodities. Legal and Political Environment Every business operates in a legal environment that requires compliance. An international business faces the legal environment in both the local and foreign countries. Understanding the legal requirements in both countries becomes mandatory for a business in its quest for survival. The legal procedures involve the conditions for transactions, payment, contacting among others. Legal conditions significantly affect the undertaking of business within and outside any country. A business faces taxation procedures in both the domestic and foreign country. This reduces its revenue by increasing the costs incurred. Pinnacle Company complies with the legal procedures through the employed lawyer and accountant who prepare and review financial statements. This ensures timely compliance with set legal procedures and reduces the risk of lawsuits. Interest and Foreign Exchange Rates Prevailing interest rates affect the prices of the imports and exports of a country. Market forces determine the interest rates although governments also intervene in setting interest rates within a predetermined range. Interest rates affect the cost of financing for various businesses. High interest rates discourage capital borrowing hence reduces the level of investments. Low interest rates encourage borrowing while at the same time discourages investments. Foreign direct investment form major parts of various economies. It therefore becomes necessary for governments to address the fluctuations of the interest rates. The World Bank and the IMF play crucial roles in the regulation of interest rates specifically in the economies of developing nations. The pinnacle experiences these effects just like any other international company. It deals with the fluctuation of the foreign exchange rates through hedging, forwards, and future contracts. Forward contracts protect the business from economic exposure where it may incur losses due to fluctuations of the foreign currency (Craig 2014). Binding contracts with the customers protect the company from transactional exposure where the customers may fail to pay for goods and services delivered to them. Outsourcing Production This involves the decisions for making or buying products. If the cost of production exceeds the cost buying a product, the firm should consider stopping its production process and instead buy the commodity from suppliers. The advantage of buying involves less cost of production since the actual production process ceases to operate. However, in making the decision to make or buy, a firm must consider the quality and standards of the product offered to them for sale. Charging the responsibility of production to another company may lead to variation in the standards of the commodity and may compromise its quality. Pinnacle fresh company makes the decision to buy its commodities due to the wide variety offered by the suppliers of farm produce. The local suppliers present their produce to the company for vetting of quality. The company sets the standards that the produce must attain for qualification of buying. During low seasons, the company invites foreign producers to sell their produce to it. These products also undergo various scrutiny measures before acceptance. Outsourcing from a different country replenishes its inventory level and prevents shortages. Internalization International business focuses on the operations of a business globally. This determines its success in the international market. However, this only becomes possible if the internal management of the firm is efficient. Internal management involves the communication between the employees within the organization. Pinnacle employs capable employees who professionally carry out their duties. This enables the efficient management of the operations within the organization. The corporate governance ensures motivation of employees in performance of their jobs. The value placed on the organization’s employees also motivates their performance. This ensures efficiency in carrying out of various operations. Efficiency in the internal management of the company also translates in the coordination of various functions in the international market. Marketing Strategy Australia as a multicultural nation offers a population with diverse cultural attitudes. This translates into a wide variety of products produced by the nation’s farmers. The tourism industry offers a major boost to the agricultural sector in the country. Gastronomic tourism displays the local agricultural produce utilized in the preparation of gourmet cuisine (Zander 1993). This creates a wide market for the produce since the tourists order the products even after traveling to their respective countries. Pinnacle fresh benefits from this through expansion of its demand from local and foreign tourists. References Sinha Kumar P., Sinha Sanchari 2009. International Business Management, Excel Books, India. Adekola A, Serge Bruno S 2012, Business, and Economics, Ashgate Publishing Ltd Rugman Alan M, Francis Taylor 2002. International Business Enterprises, Taylor, and Francis Publishing Dlablay Les, Scott James 2010, International Business and Economics, Cengage Learning The book offers the reader a foundation in the understanding of international business and basic concepts of the trade. Hambrick, D.C. & Chen M., 2008. New Academic Fields as Admittance-Seeking Social Movements: The Case of Strategic Management, Journal of Academy Of Management Review 33(1):32-54 Zander 1993. "Knowledge of the Firm and the Evolutionary-Theory of the Multinational Corporation". Journal of International Business Studies 24 (4): 625–645. Dunning, John H. 2000. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions" . Journal of International Business Studies 19 (1): 1–31. George Richard, Mcfarlane Don, Nulsen Bob 2012. Salinity Threatens The Viability Of Agriculture And Ecosystems In Western Australia. Hydrogeology Journal (1):6-21 Craig James 2014. Australian Stock Market Report. International Business Times. Retrieved 19 September 2014 http://au.ibtimes.com/articles/566797/20140919/Australian-sstock-market-morning-september-19.htm N.A 2014.FAO To Help India Develop Agriculture, Food Security. 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