Doing Business in The new World
What is IB (International Business)
International business is defined as business transaction between parties within two or more countries. It involves purchase and sales of raw materials, or finished goods across borders and borrowing money in one country to finance the operation in the other country. It is characterized by using foreign currency as part of the transaction and requires the companies or businesses to adjust to the legal systems or cultures.
The international business differs from the domestic businesses in various aspects. For example, the domestic business involves transactions across the business boarders. The concept of international business is derived from the fundamental objective that the local market is not sufficient to push for the company’s growth. This implies that the company with objective of growth and expansion would go for international business. Secondly, to take advantage by acquiring resources and going international would minimize the risk
Globalization is defined as an ‘inexorable integration of markets, nations and technologies in such a way that it assists the businesses and individuals to explore the world by making the operation of business faster, cheaper and convenient. The effect of globalization on international business is that it promotes free trade, capitalism and democracy. Secondly it has led to the creation of new opportunities for those with capital to increase by increasing the wealth in the hands of the minorities (CourseBB 2017). However, it is criticized in that it promotes social vices such as crime among others.
Political and Legal environment facing business
The political and legal environment in an international business refers to the collection of political, rules and regulation activities in a foreign market that can either facilitate or influence the operation of the business in the foreign market. The example of political factors includes the government policies such as adoption of the socialist approach to the economy where all the industries and other infrastructure are controlled and owned by the state. The legal factors include the regulation passed by the state to which could be in form of trade agreement, contracts and other rules. The government may pass legal regulations that prohibit foreign countries from participating. This could be done through increased taxation and administration of bottlenecks.
Some state laws may influence foreign companies’ performance and operation, especially in through antitrust prohibitions, contractual relationships, environmental practices, and patents and trademarks. The legal implications govern the operation of cross-border activities; include the investment of capital, the payment of dividends to foreign investors, and customs duties on imports. International laws, such as treaties governing the states transfer of hazardous waste, can also influence the operation of businesses in transporting shipments across several bordering states (Hill, 2016). These factors may affect the operations of the international business.
Government Influence on Trade
The government can influence trade either positively or negatively. The government may create a conducive environment that favors the business men and states through reduced taxation, provision of subsidy and encourages free trade. Conversely, the government can influence trade through passing legislation that hinders the performance of foreign country by increasing the cost trade, through increased taxation.
Wal-Mart Inc. as an International Business
The example of international business chosen is Wal-Mart Inc. it conducts its business on an online platform that allows individuals to access Wal-Mart’s product anywhere in the world online through their mobile phones and in stores. They provide access to high quality and nutritious goods at an affordable price by creating opportunities for associates and medium sized global suppliers. The factors that necessitates is operation in the 27 countries is attributed to its strategic management plan, innovativeness and being a trusted dealer by providing quality and nutritious goods over the years.
Coursebb.com (2017). Challenges and opportunities of Globalization CourseBB. Retrieved from https://www.coursebb.com/2017/07/19/challenges-opportunities-globalization/
Hill, S. (2016). Globalization and Education. Faculty.education.illinois.edu. Retrieved from http://faculty.education.illinois.edu/burbules/papers/global.html