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International Business and Globalisation

University: COVENTRY UNIVERSITY

  • Unit No: N/A
  • Level: High school
  • Pages: 13 / Words 3165
  • Paper Type: Assignment
  • Course Code: 311MANSC/311MANEL
  • Downloads: 353
Question :

This sample will let you know about:

  • What are the impact of global trade and globalisation?
  • Discuss about the planning for different international markets?
  • What are international business?
  • What are the different patterns of internationalisation  ?
Answer :
Organization Selected : Airdri

 INTRODUCTION

International business is defined as process of trading of services, technology, products, knowledge, capital across national as well as global border (Boussebaa, 2015). This includes transaction among cross border of products and services among one or many countries. On other hand, globalisation is defined as procedure of integration as well as interaction between companies, people and governments globally. Both are part of business to enhance their profit margins at marketplace. The given assignment is based on Airdri which was established in 1974 at United Kingdom. It is global leader in hand dryer development. Products are designed for recognised and comfort of their low energy, longevity, reliability, reduced noise. The main purpose of this report is to discuss about importance as well as impact of global trade and globalisation for business. It also demonstrate awareness of contrasting international market for decision making along with pattern of internationalisation taken by global firm. The theories are used for solving problem in planning of several international markets.

1) Importance and impact of global trade and globalisation

Global Trade

It is also called as international trade which is defined as process of exporting and importing products as well as services across global boundaries (Buckley, 2016). Here, when goods and service are sold to other countries then it is called exporting. On other hand, when products are brought from other countries then it is referred as importing. In order to expand business and increase profit margins, global trade should be adopted by business. Some of the importance and impact of global trade are described below:

Importance- International trade among various countries is significant element in raising living standards of people, creating of employment opportunities, assist consumers to have large variety of goods. According to data provided by World Bank, there is rise in GDP from 12% to 30% in 2015 (The importance of international trade, 2020). Some of the importance of global trade are as follows:

Greater Choice for Consumers- Global trade focus on bringing several options for specified goods and services from different places. It provide consumers with variety of options to chose products and purchase it. Airdri should evaluate market first and according to requirement of consumers they should provide them.

Employment Opportunities- International trade assist in creating employment opportunities for people which leads to cut down unemployment rates. If respective organisation want to expand their business at global market then they are creating job opportunities.

Impact- Global trade provide both positive as well as negative impact to organisation for running their activities and operation at marketplace. Some of the impact are as follows:

Dual Economies- Trade resulted into creation of dual economies in underdeveloped countries that leads exporting sector to developed whereas other economy of country remain backward. This is negative impact for countries as well as organisation to enhance themselves at competitive marketplace.

Increase in Business Opportunities- It is positive impact to Airdri as it can expand business in other place where they get new skilled and experience employees for performance, adopting of different culture and tradition at workplace for better results.

Globalisation

It is defined as growing interdependence of nations that results from rise in integration of finance, ideas, trade and people at single global marketplace (Cantwell, 2017). This integrate and interact with firms, people and government worldwide. The importance and impact of globalisation in context of Airdri are as follows:

Importance- There are some importance of globalisation which assist Airdri in terms of following

Foreign Direct Investment- This leads to rise at greater speed rather than increase in global trade (Cohen, 2017). FDI assist in boosting technology transfer, restructuring industry and growth of international organisation. It assist respective organisation to enhance their business at global level.

Technological Innovation- Globalisation leads to increase in technological innovation which assist in improving economic output through making process to be more efficient and efficient. In context of Airdri, they can move for globalisation and adopt technological innovation which is required for their products and services.

Impact- While doing globalisation, there can be positive as well as negative impact to business for attainment of goal and objectives. Few of them are as follows:

Competition- It is the positive impact of globalisation which assist in improving quality of goods and services due to rise in global competition (Cramer, 2017). Customer prefer high quality goods and services which is required to them. This assist Airdir to manufacture high quality products and compete with competitors for earning high profits margins. Along with this, it rise in goodwill and brand value of business at marketplace.

Job Insecurity- It is the negative impact of globalisation in developed countries as people faces job insecurity as well as lose employment. As developed countries outsourced manufacturing as well as white collar jobs that leads to requirement of less number of people.

Therefore, global trade and globalisation are important for respective organisation to enhance their business at different market and place in order to raise their brand value, goodwill and profits margin in an effective and efficient manner.

2) Demonstrate an in-depth awareness of contrasting international markets in context of international business decision making

For an organisation an in depth awareness is important while choosing international market and entry mode for internationalizing firm (Davidkov and Yordanova, 2016). However there is a lack of analysis concerning the decision making process, majorly in context of small and medium sized enterprises. In context of Airdri which presently serve the consumer electronic market place with their product hand dryers. Since the electronic revolution hit the market, to remain competitive required furious investment and innovation to gain growth and opportunities. The major trends needed to analyse before going into the international market place which occurs in electronic market are as follows:

Product design outsourcing- Designing of the product plays very much important role in building perception in the mind of consumer and helps in taking decisions (Ferreira, Fernandes and Ratten, 2017). In context of Airdri they majorly have to focus on the moving product design and development processes while operate at global level as it is potential to give competitive advantage in marketplace positively.  In hand dryers by using specialised designers needed to design their hand dryers very attractively so that they can occupy special position in market. 

Virtual reality- The another important needed to work on while operate in the international marketplace which is provide virtual reality to consumers so that they can feel the advantage of hand dryers of Airdri and easily can take decisions to purchase them. It also used to improve the manufacturing process and bring efficiency in the product outcome positively. The technology in the electronic manufacturing industry is often referred to as digital design, simulation and integration and eliminating defects in the production process in order to produce effective kind of products for serving consumers positively. So it can be said that respective factors plays very much important role in enhancing the consumer experience and gain the large market share positively.

Robotics and automation- In electronic industry role of robotics and automation plays very much important role in order to improve the plant efficiency and productivity in order to gain desirable outcomes from them (Groenland, 2018). In context of Airdri they while operate at global level needed to upgrade in their technology by using various kinds of machines to access the invaluable data to reducing the breakdowns that save the cost of business and provide consumers in effective price range. So it is very essential for Airdri to use best tools and technology by visualizing the competitors strategy to take step accordingly.

It is also potential for them to integrate or collaborate their products with the IoT technology to make the life of consumers comfortable and convenient. Respective tool has the interconnectivity with the physical objects and devices that connect with sensors and software to allow them to allow and exchange data potentially. Collecting information regarding consumers interest and relevant collection of information in order to take prompt decision in favour of consumer decision making. So in context of Airdri to operate at global level needed to embrace respective technological advancement potentially by examining the consumer taste and preferences. So collection of necessary knowledge and information is very important for organisation to remain competitive in marketplace.

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3) Analyse and critically evaluate pattern of internationalisation undertaken by international businesses

Internationalisation is referred as procedure of implementing as well as planning goods and services in order to adopt to particular local culture, language and others (Hanson and et. al., 2016). It is very important  for organisation to adopt pattern of internationalisation for international business in order to attain goal and objectives. According to opinion of Darpan Saxena, 2020, there are different modes of entry into international business such as direct exporting, joint ventures, strategic decisions, foreign direct investment, licensing, franchising and others (Modes of Entry into International Business [Advantages & Disadvantages], 2020). They are described below:

Direct Exporting- It is defined as exporting of products and services to other global market. This is regarded as fastest pattern of internationalisation for business. The respective organisation has an opportunity to export their products in other countries with help of direct exporting mode. It assist in marketing products as well as brand at marketplace. This can provide benefits to respective organisation to select their international representatives in overseas market. It assist in protecting goodwill, patents, trademarks and other intangible assets. Similarly, on other hand, it carry some negative points which leads to increase in cost for business and no control over distribution of products. Airdri can adopt such pattern of internationalisation for their business to expand in other market to gain high profit margins.

Joint Ventures- This is also defined as entry mode or pattern of internationalisation for business which does not share their knowledge, brand and expertise (Hill and et. al., 2017). Company which want to expand their business into oversea market can adopt such mode with local firm and sharing of rewards as well as risks in appropriate manner. Here, both organisation has to share costs, profits, investment, losses at decided proportion. Such types of pattern is appropriate when government does not allow for 100% ownership of industry at foreign. This internationalisation is possible for Airdri if other company has common objectives like technology sharing, joint product development, risk & reward sharing and so on. It is useful in meeting shortage of financial, managerial and physical resources. It provide benefits in optimum utilisation of resources and competence of technology. In addition to this, it has some disadvantages like costly, conflicts and others. While adopting respective pattern of internationalisation, Airdri has to share their objective with other foreign company and come together.

Foreign Direct Investment- This is referred as company entering to overseas market through doing investment in other country. It is possible through merger and acquisitions, greenfield investment and joint ventures. Airdri can adopt such pattern of internationalisation for overall development of their firm at marketplace. This can be performed through purchasing share of company, assets and property. It is the easiest entry mode along with providing option of modification at any period of time. On other hand, return on investment is very low and policies of government are not useful.

Licensing- It is the method that provide permission to business to use their legal protected technology as well as products for particular time period (Hirst and Thompson, 2019). This is the easiest method for entering into foreign market which possess less communication and control. There are two parties such as licensor and licensee where risk is transferred to licensee for proper utilisation of resources. Airdri can enter into other market through licensing in order to sale their goods and services in an effective and efficient manner. It provide benefits in terms of low cost of labour, easy appointment and low involvement of investment. In order to adopt such internationalisation pattern, time consuming is more and there is decline in product quality.

After studying various pattern of internationalisation, Airdri should opt for direct exporting because it is the most easiest and simplest method to enter into foreign market. They can easily sale their products and services to other countries by following some rules and regulation of that place in effective manner. This type of mode leads to rise in high profit margins and attainment of set goal and objectives. Therefore, it is essential to analyse each and every patterns and as per requirement of consumers and market, they have to adopt it for positive results. Airdri is small organisation so it is better to adopt exporting mode.

4) Critically apply appropriate knowledge, theories and tools to help formulate a range of alternative solutions to practical problems in planning for different international markets

While entering into international market, there are different types of problems which can be arise in front of organisation which need to be resolved through use of knowledge, theories and tools. Some of major practical problems in planning for different international markets are described below:

International Company Structure- It is practical problem which is faced by organisation while entering into international market (Li, 2019). As structure of each and every company is different from one another which create issue for firm. Airdri is small organisation and if it want to expand their business in international market then they have to considered company structure so that they can survive and sustain at competitive market to gain positive outcomes. In order to solve such issues, Airdri has to adopt situational leadership approach for solving problems of company structure. Situational leadership is defined as theory which assist leader to adopt all types of situation arise at organisation to attain goal and objectives. This is important theory which should be adopted by leaders who are working in business place at competitive market. It assist them to prepare them for adopting all types of situation arise at marketplace for positive outcomes. In case of failure to adopt such theory, respective organisation cannot attain goal and objectives in an appropriate manner. Therefore, in this way, problem of international company structure can be solved by adopting situational leadership approach in proper way.

Currency Rates- The payment methods as well as setting prices are major consideration for business to expand at international market (Perraton, 2019). Fluctuation in current rate is the most biggest and challenging problem for international business. Monitoring of exchange rates is regarded as central part of strategy for global expansion. When there is change in currency rates at unpredictable level then business has to face huge loss. This can impact balance between profits and expenses of business. For example, if Airdri wants to expand market in United States and during that time, there is fluctuation in currency rates then they have to bear loss. In this case, they can protect themselves from huge fluctuation in currency by paying their suppliers as well as production cost in same currency in which they are selling to them. They can also adopt other option to mitigate risk of unpredictable exchange of currency rates by setting agreement and contract of price in advance for future sales at marketplace. This provide benefit to respective organisation by providing high profits in their favour. This can protect sales of business from risk occurred by unstable currency. This problem should be identified by business in order to provide appropriate solution in an effective manner.

Communication difficulties and Cultural Differences- The effective communication is regarded as heart of international business (11 Biggest Challenges of International Business in 2017, 2017). It is very difficult to perform communicate across culture. Communication and culture difference is practical problem which is faced by business which is expanding their firm at international market. In order to achieve success and growth, effective communication with clients, customers, suppliers is required. As per understandable form of communication, respective organisation has to use proper communication channel in order to attain objectives of firm. Before expanding business at international market, it is essential for Airdri to analyse market, spoken language, culture so that they can adopt it. Cultural differences can easily influence market demand for goods and services. In order to solve such issues of communication and cultural difference, they have to adopt Hofstede model. This is framework of cross cultural communication that was founded by Geert. It has six components such as power distance index, uncertainty avoidance, masculinity vs femininity, indulgence, term orientation and individualism vs collectivism. According to arise issues, problem should be solved in effective manner.

Apart from these problems, other can be foreign laws and regulations, universal payment methods, global pricing strategy, political risk, choosing right shipment methods. These are faced by all business who are expanding their business at international market. Organisation has to analyse them properly and make decisions in better way for attainment of goal and objectives.

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CONCLUSION

From the above report, it has analysed that international business and globalisation are part of organisation which they have to perform for earning of high profit margins. It is essential to understand importance of global trade and globalisation because it creates employment opportunities for employees, innovation in products and so on. This provide both positive as well as negative impact to business in terms of rise in price, losing job security and many more. In order to make international business decision, it is crucial to understand opportunities and trends at marketplace so that organisation can attain set goal and objectives. For international business, there are different patterns of internationalisation which can be adopted by organisation such as joint venture, exporting, licensing, franchising, strategic alliance, foreign direct investment and many more. There are several practical problems arise due to internationalisation like change in currency rate, company structure, difference in culture, communication difficulties, payment methods and so on. These should be solved through using of different knowledge, method, theories and tools so that proper outcomes are achieved.

Read Also :- Business Communications

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