Question 1What does the term globalisation mean in relation to international business and what effects is this trend having on international competition. Globalization is the process by which economies of various nations of the world have become integrated into the international economy through a global network of communication, trade and transport. On the other hand, international business is any economic activity that takes place across many nations. Business across nations take place in all fields including banking, insurance, consultation and all any other business that takes place at the local levels. Globalisation in relation to international business means a world that is characterised by improved technology that has resulted in multinational businesses and higher value of the international trade.
This technology and the value of international trade have therefore resulted in transformation of the national companies into multinational corporations (Jagdish, 2004). This trend is however having an impact in the international competition. This is because for business firms to survive in the global market, they have to improve on their productivity. This will require them to employ high technology in their production process, highly skilled labour and efficiency in production.
There is competition in acquisition of highly skilled labour in the global market, a factor which is scarce. This therefore calls for increased incentives to the workers so that the company can retain them. Labour has therefore become expensive in the global market due to competition for the labourers. Competition is also felt in production. Every corporation has to struggle to offer the best products so that they can survive the global competition. Technology has to be increased where all processes of production must remain updated.
The machinery that is used must also be of high efficiency so that they can achieve maximum production. Globalization has also resulted in international competition for resources. Firms are struggling for resources so that they can have adequate for their production. The strong firms are however on the advantage when it comes to acquiring resources, unlike the smaller firms. However, this competition is of benefit to the customers. This is because they will receive standard goods since all the firms will be struggling to offer the best.
The highly skilled workers will also benefit from better pays since all the firms will be competing for the best employees and they will be attracting them by giving them better pay. Prices have also gone down since each firm want to offer affordable prices to the customers. Globalisation will therefore result to increased competition in the international market and this is benefiting the customers as well as the workers. Question 2Outline concisely, using some point format where appropriate, the main factors in the world economic environment faced by international business. The economic environment in which the international business is taking place is characterised by many factors which include: Rapid growth of the economy with rise in Multi-National corporations.
The economic landscape is rapidly changing throughout the world. In Europe, a new economic superpower has been created in Europe by formation of an integrated market and economy known as the European Union and further reuniting it with Germany. The rapid growth is also being experienced in the Southeast Asia Nations by use of export-oriented industrialisation. The industrial sector in these nations has greatly boosted the GDP especially by the manufacturing industries, as well as the mining and oil industries.