International Business : Commercial Transactions Across Nation Borders Essay

International Business : Commercial Transactions Across Nation Borders Essay

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International business refers to the commercial transactions across nation borders. The different ways international business is being done include trade, foreign direct investment, licensing, franchising and management contracts. Over the last five decades, statistics show that international trade and investment has grown faster than the domestic economies. The globalization in international business will continue to accelerate with the emergence of national economies, advancements in technology, increase in FDI, similarity of needs and wants as driving factors. Considering that 95% of potential customers are outside the US, it is difficult to not embrace today’s global economy. The continuing growth will present opportunities and challenges for corporations and national economies, including a larger market demand, agile growth of population and income. Companies and national economies in the future will require adjustments to the changes to maximize revenue and minimize output.

While the US has currently the largest economy with 22% of world economy, the emerging markets of the Trillion Dollar Club plays a paramount role in today’s growth of international business. According to McKinsey, 440 cities in the emerging markets from 2010-2025 will generate 50% of all global growth. Emerging Markets such as China and India will continue to drive growth in international business. While India’s income grew 5% from 2005 and 41% by 20215, China has become the world’s largest automobile producer and consumer in 2009. China has also replaced the US as the world’s biggest importer for Japan, South Korea, Taiwan, Thailand and Indonesia. The Emergence of BRICs stimulates adaptation and innovation in existing businesses as well as benefit glob...

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...also given the opportunities to use resources to the fullest. For example, The Volvo car is made in 38 different nations and states, achieving low production costs, high quality products by simply outsourcing to distribute labor. A strong understanding of the local market will allow companies to target the consumers, meeting their needs effectively and consistently. With this globalization of business, companies can focus on “in the market for the market”. This model allows companies to cut down production and transportation costs, utilizing local resources to create products for the local market.

International business offers access to new customers, economic solutions, and gathering human resources. The growth of international business stimulates competition for companies and nations; one must adjust and take advantage of innovations and productivity to succeed.

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