Question

What are the basic reasons for the recent growth of international business activity?

How has technology contributed to the globalization of markets and production?

Comment on the following statement: “Ultimately, the study of international business is no different from the study of domestic business."

Please introduce a relevant current events story from the news, provide a link to the story, a proper citation and your comments, summary or interpretation of the story and its relevance to our studies this week.

Answer 1

The basic reasons for Growth of business activity at the international level are numerous and some similar to growth in the domestic business some different.

• Saturation of domestic markets is a major reason when a business faces stagnation in demand and reduced sales it makes sense to look for fresh pastures where the product maybe a novelty and competition also non existent so early entry into new markets can combat this issue giving a fresh lease of life to sagging profits.
• This is presently possible because most nations are striving towards an open world economy rather than a constricting national one by breaking down trade barriers and welcoming foreign companies to create a competitive environment facilitating growth while simultaneously protecting the interests of domestic players.
• Low cost of labour is another attraction for companies expanding horizons to far off countries. Profitability being all important every factor counts not only increase in sales but reduction of cost is an all important factor for maximising profits. Hence, labour intensive industries are exploring options of setting up facilities in countries where human resource of required calibre is available in large quantities at much cheaper rates. This gave rise to the outsourcing boom as we call it.
• Low cost of inputs like raw materials or technology. Another important input for manufacturing concerns becomes raw material and it makes sense to relocate to an area where it is available abundantly and at much lower prices.

Communication technology has made a huge impact on modern business whether domestic or international, and proved the adage the world is a village right. Earlier expanding business to foreign lands was a dream which only top business houses could make true due to availability of huge capital resources at their disposal. The internet has put world markets at our doorsteps. E commerce is another thing altogether where you benefit from international markets without even setting up facilities there. the simple availability of all information at our fingertips makes it possible to identify target zones with required inputs and markets. It has literally taken business to another level. Technology has invaded every aspect of a business right from stock-keeping to sales to payments to marketing and of course manufacturing. We are living in a world where rapid improvement in technology has revolutionised the way businesses operate and expand.

“Ultimately, the study of international business is no different from the study of domestic business." is very true. Business whatever and wherever has a basic core which is uniform and consistent across every business its like the atom is the core of all types of matter. Businesses are all driven by the motto of maximisation of profits and everything else is build around this one main aim. Also, they have similar structure as the basic requirements are similar in any business you need a top, middle and bottom level you need a sales, marketing, human resource, administration and manufacturing team maybe some basic differences depending on the size and requirements of individual businesses. However, the idea is to keep a close eye on everything that impacts profitability all input and output costs.