International Business Management

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.… Read the rest

Abey Francis

National Competitive Advantage Theory of International Trade – Porters Diamond Model

It is a fact that Porter (1990) never focused primarily on the factors determining the pattern of trade, yet his theory of national competitive advantage does explain why a particular country is more competitive in a particular industry. If, for example, Italy maintains competitive advantage in the production of ceramic tiles and Switzerland possesses the competitive advantage in watches, it can be interpreted that the former will export ceramic tiles and the latter will export watches and both of them will import goods in which their own industry is not competitive.

Why is this there a difference? Porter explains that there are four factors responsible for such diversity.… Read the rest

Abey Francis

Trends in International Trade and Cross Border Financial Flows

When a firm operates only in the domestic market, both for procuring inputs as well as selling its output, it needs to deal only in the domestic currency. As companies try to increase their international presence, either by undertaking international trade or by establishing operations in foreign countries, they start dealing with people and firms in various nations. Since different countries have different domestic currencies, the question arises as to which currency should the trade be settled in. The settlement currency may either be the domestic currency of one of the parties to the trade, or may be an internationally accepted currency.… Read the rest

Abey Francis

Challenges of International Financial Management

Financial management of a company is a complex process, involving its own methods and procedures. It is made even more complex because of the globalization taking place, which is making the world’s financial and commodity markets more and more integrated. The integration is both across countries as well as markets. Not only the markets, but even the companies are becoming international in their operations and approach.

Managers of international firms have to understand the environment in which they function if they are to achieve their objective in maximizing the value of their firms, or the rate of return from foreign operations.… Read the rest

Abey Francis

Trading Blocks Concept in International Economics

The post-second World War period has seen a growing interest in integrating national economies at regional levels. The efforts to form regional groupings, trade blocks and treaties have often floundered due to political differences and unforeseen economic hurdles.   The motivation arises out of the realization of the limitations imposed by national frontiers and the expected benefits of a wider market, consisting of several national economies.

Regional trade agreements represent an attempt by a group of countries to increase the flow of trade and investment by reducing direct and indirect trade barriers between them, as well as implement similar trade policies vis-à-vis outsiders.… Read the rest

Abey Francis

How Do Firms Internationalize?

The simple facts remains that firm internationalize for many reasons or the other; be it, profit motive, the expansion to new horizon, exploring and tapping new markets or for reasons less known, that is to say for competitive advantage or labor mobilization and last but not the least, the cost factors.

Moreover, by going international, firm can also take center stage to reaps the benefits of global exposure, and the opportunity cost that can be reaped from international business is also rather more in a sense that diversity is also exemplified, plus the means that internationalization provides towards new markets beyond national boundaries is also what’s excites and interest organizations in going international.… Read the rest

Abey Francis