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As competition intensifies on domestic and international levels, many companies are compelled to look beyond normal business practices. Twin forces of technology and globalization are the mechanisms that progressively propel international business growth to new heights. New opportunities exist as barriers to trade and capital are lifted. Exports and imports are now within reach with multinational corporations leading the way for international economic innovation.
Businesses that want to venture into global markets look to successful multinational corporations for efficient practices. Companies that operate in the global market have efficient systems to deliver goods and services. They also provide insightful perspectives on exploiting advances in technology that puts global competition within reach.
For emerging industrialized nations, the economic strength to compete in a global world is growing. According to the International Monetary Fund, combined countries in the development stage have a larger economy than individual developed nations. This presents more growth opportunities for businesses looking for ways to stimulate international business activities.
With $1.6 trillion more in goods and services projected for 2013, the purchasing power of these countries are in parity with advanced markets. Now is the time for businesses to grow through exports and compete for customers outside the borders of their countries.
Technically, international business is a broad concept that includes trade, production and any other business activity that occurs across different countries. This may include government and private commercial transactions, transportation, investments or sales – all the things that occur during the normal course of business. The primary difference is expanded business borders opens opportunities for things to occur beyond regional and national boundaries.
Globalization's Influence on Growth
There are numerous growth factors that contribute to the successful globalization of business opportunities. Technological advances have helped to streamline logistical issues with communications and transportation between two or more countries. As economies continue to grow, governments are relaxing the restrictions that previously hindered economic expansion.
Consumer knowledge also contributes to the global reach of international business. One example of this is American citizens who know they can pay less for pharmaceuticals that are manufactured and sold in Canada. Other goods and services from foreign countries are also on the consumer radar.
Global competition has forced businesses to think outside the box. Businesses are realizing the importance of using resources efficiently for survival. As new opportunities open abroad, these businesses are in a stronger position to compete.
Political relationships are also driving the growth of international business. Politicians understand the benefits of cooperating with other countries that need native resources. At the same time, corporations that have major investment and trade commitments in foreign countries follow political winds for signs of unrest.
Why International Business is Important
Participation in international business gives companies the opportunity to take advantage of a broad marketplace. This exposure broadens the worldview of different lifestyles, behaviors and practices that can influence innovation. The domino effect is a growing economy that soon benefits the nation.
Additionally, a raised awareness helps people from diverse cultures appreciate the similarities. Even when differences outweigh similarities, some business people will acknowledge the interrelation between economic practices and political polices. What seems good for one country could hamper growth in another.
Reliance on home territory only exposes businesses to failure when consumer demand declines. However, businesses have opportunities to reach more consumers through the global marketplace and remain viable even if economic conditions begin to wilt at home. Unless the world faces a global economic crisis like the one in 2008, it is unusual for all markets to simultaneously decline.
Contributing to the importance of international business is the concept of economic integration, which refers to an arrangement between different regions to remove trade barriers. Trade agreements, free trade alliances and common unions represent the varying levels in which economic integration exists.
Economic and political unions between countries create short-term and long-term benefits for businesses. Tariffs that previously restricted businesses from one country to import goods are lifted to give those businesses access to a broader consumer base. An economic boom positions businesses in both countries to experience long-term benefits from integrating two economies.
Economic integration has not always had a smooth process in the globalization stage. However, some countries have made this work for consumers and manufacturers of goods.
Consequently, international business has a bright future in the globalization landscape. The daunting nature of a broader market will not overshadow the allure of business success. Tax breaks and simply having a product or service in demand on the global marketplace will keep businesses within reach around the world.