It is almost commonplace today to find businesses venturing into international markets. Thanks to advancements in communication and information technology, this trend will most certainly persist for the predictable future. The most domestic organization’s when considering expansion will usually look outside their geographical location. This usually means looking at opportunities in international markets. It is believed that managing and running a domestic business is less complex than undertaking international business for a number of reasons. Nation-states typically have unique laws governing trade and investment, variations in business ethics and culture, different political systems, monetary policies, currencies, and so on. And these are all possible factors that could make international business more complicated and therefore, riskier than doing business at home. In discussing the differences between international business and domestic business, it will make sense to discuss issues involved in doing business internationally that will not otherwise be present or proveContinue reading
International Business Basics
The Effects of Globalization on Multinational Corporations
Globalization is the competition in an international market. The growth rate of developing nations and their acquisitions of previously first-world owned corporations indicates that the developed world no longer has the upper hand economic growth in the west has been miniscule in comparison. Success in this new global market requires the ability to accommodate the different needs of diverse consumer groups. Companies can achieve this through product and process innovations and maximize profits. Entrepreneurship is also increasingly recognized and as an alternative course to fortune as opposed to trading rare commodities. Companies from emergent economies are following the lead of their developed counterparts, issuing stocks and encouraging investment. This encouraged growth and share appreciation, surpassing past expectations. Some emerging companies’ growth has even outpaced well-known multi-national companies (MNCs) from the developed world-competing, acquiring and exploiting the endeavors and experiences of first-world MNCs. Similarly, developed nations are tapping into emerging economies,Continue reading
Rangarajan Committee on Balance of Payments
Dr. C. Rangarajan, former Governor, Reserve Bank of India who headed the high level Committee on balance of payments submitted its report on June 4, 1993. The Committee made the following findings and recommendations for correcting balance of payments: 1. The Committee stressed the fact that a realistic exchange rate and a gradual relaxation of restrictions on current account transactions have to go hand in hand. 2. In the medium-term care has to be taken to ensure that there is no capital flight through liberalized windows of transactions under invisibles. At the same time there is no escape from a very close control overall capital transactions so that future liabilities are kept under control. 3. The Committed suggested that Current account deficit of 1.6 per cent of GDP should be treated as ceiling rather than as target. 4. The Committee had given number of recommendations regarding to foreign borrowings, foreignContinue reading
Significance of Balance of Payments (BoP) Data
Balance of payment records all economic transactions between a county and the rest of the countries around the world annually. The balance of payment is made up of two distinguished components respectively the current account, capital and financial accounts. Transactions such as exports and imports of goods and services, income and transfers are recorded in the current account. On the other hand transactions relating to portfolio and foreign direct investments are recorded on the capital and financial accounts. Balance of payment is an important indicator of the health of any country’s business as it reflects its international trade and investment performance. Hence, in the Balance of Payment, sources of funds are recorded as positive and uses of funds are recorded as negative. All things being equal Balance of Payment sums to zero with no overall surplus or deficit but if a country is importing more than its exports, then itsContinue reading
International Marketing Communication – Key Issues and Challenges
When first starting-up an organization, launching a new product or service or simply reminding customers that the organization exists, firms need to educate consumers. This education comes in the form of marketing communication, which is otherwise known as promotion. Promotion is an organization’s articulation of messages it wants to send to target audiences to achieve business objectives. The promotion mix or integrated marketing communications (IMC) consists of advertising, sales promotion, trade shows, personal selling, direct selling and public relations. Without doubt, investment in one or more of these methods of communication will increase the firm’s costs, and for this investment to be a profitable one, the marketer must know the purpose of promotion. The Chartered Institute of Marketing claims that “the purpose of any form of marketing communication is to provide a set of information to your target audience in a way that encourages a positive, or buying, response. TheContinue reading
Barriers in Cross-Cultural Communication
Cultural noise refers to barriers and impediments to successful communication among people of different cultures. Sources of cultural noise are numerous and could be consist of: Difference in language for instance the same words have different meanings in two languages which can creates noise in communication. Dissimilarity in non-verbal cues such as interpretation of body language. Differences in values such as importance of being on time in a culture. Self-reference criterion (SRC) which refers to one’s unconscious reference to one’s own cultural values when attempting to understand another culture. In the process of organizational communication model, fail in communication at any point can happen. Breakdowns occur when the sender fails to influence the receiver in the ways that are intended or when the receiver fails to do the same. The sender may convey the message in a way which is not received. The receiver might decode the message inaccurately, misinterpretContinue reading