International Business and National Differences

Globalization and international business

International business has never been a simple matter. In point of fact, with the diversified number of countries which engage in global business, the challenge is anything but easily surpassed. There are many lessons to be learned in gaining an international view of economics. Education about the world’s economic structure, cultural differences and the interrelation between the two is as important as understanding the methods your business uses from start to finish. Globalization has set the pace of this approach in recent times.

Globalization of corporate entities is a situation that is hotly debated. It would also be one that is fiercely territorial in some cases. It is widely believed that to survive as a corporate sector in the long term it is extremely important to mould the organization into an international sector. Therefore, it’s that much obvious to plan the strategies of the company in accordance to international trade sequences.

David C. Korten has quite interesting methods for our understanding of globalization in managerial economics. “Initially, the question of whether global rulemaking should be centralized in global institutions or decentralized to the extent possible to national and local levels was an important point of contention.” (Korten, 1) Korten goes further to state that centralization; in the eyes of many from the northern states in the US this is the preferred method for management and enforcing a series of set standards toward labor and economics in the world.

The south would have a different viewpoint, in that centralization tends to favor one body in place of more than that. Understanding global economics from a managerial perspective requires an understanding primarily of economics. Secondly, we must understand how the economics associates in a global landscape and finally, how cultures and economies coincide or clash depending upon the situation.

National differences in political economy and international business

It should be clearly understood that national differences in political economy and international business are two issues which are inherently linked. Prevention of deadly conflict must be the fundamental initiative and should be reflected in all efforts made by international agencies. From fighting poverty and endorsing sustainable growth; through intensification of national capabilities to deal with conflict, fostering democracy and the regulations professed by law, and restricting the trade of small armaments and light weaponry; to controlling deterrent operational activities, for example the exploitations of good offices, international business operations and precautionary deployments.

There is a mounting consent that economic progress, peace-making, and conflict avoidance must be embarked on at the same time if ideas relating to peace and security are to appear and be sustained. However, this consensus has been reached only at the micro-level. Regrettably, at the international, macro level, developments indicated the momentum in the reverse direction, towards increased decline and thus greater human anxiety. In addition there are other extremely intimidating developments, which unfortunately are either overlooked or underemphasized by the international community.

However, economic understanding through international business negotiations put forward optimism that the forthcoming times will illustrate a new age for international decision-making. However, on the contrary, there are also causes to apprehend even larger global disintegration and even weakening of global establishments to a greater extent. The global confrontation with terrorism and ever increasing aggression and instability in the Middle East and similar risks are giving rise to new-fangled global fissures. The most influential and authoritative nations in the international scheme of things are not always on the lookout for multilateral solutions and increasingly expressing their disregard for international business needs.

Differences in culture and international business

Cultural differences between nations are a very difficult issue in international business. It could be mentioned that under the parameter of understanding the method and interpretation of facts the context of execution changes from time to time and place to place. The primary factor to conceptualize would be the fact that every country pursues business differently. Laws affect the ways in which business is conducted from region to region and country to country.

Negotiations are never conducted exactly as they would be where you have pursued such actions in any city, in any state in whichever country from which you originate. It is important evaluate the marketing policies to survive in the international market and analyze the effectiveness of the prevailing marketing plan. It is quite true that the activation of the international strategy would collide with that of the plans implemented while operating in the local market.

A very relevant example would be the case of Mexican company Fortune Track. The company is Spanish speaking personnel oriented organization who have little or no knowledge in English. As a result they had to translate their entire contents and advisements that predominantly focused towards Spanish speaking communities. Once the translation was completed there was no backup measures to double check the translations as a result all the translation appeared quite funny to the English specking population once the company ventured into the markets of the United States. The result was a complete failure of the promotion with thousands of dollars wasted. This blunder happened only because the management was not aware of the language of the market they were to penetrate.

In conclusion it should be mentioned that though there are many indications and examples of international business blunders there is hardly any reference point that can be regarded as a positive measure to avoid those blunders. It is definitely a complex formula to develop a winning strategy that would be successful every time when implemented but there should be indication whereby the errors or blunders could be avoided by specified formulations. In other words, there should be certain measures to avoid these blunders.

International trade theory and international business

International trade theory is the fundamental of international business. If the US is taken into account as an example of the application of the theory the explanation would be illustrious. The trend of the international investment position of the U.S. could be termed as a problematic situation because with the balance of payment being negative there lays a subtle chance of market crash and even probability of deflation. The example of East Asia could be enumerated in this situation where it was found that the credit volumes of the economy of those countries lead to the massive market crash.

It would be relevant to mention that the current account is an extremely important tool that can determine the entire business cycle of a country as current account can be determined in according to trade balance as the difference of import and export of tangible goods and services like consulting and legal. Current account is also instrumental in determining the overseas factor incomes like dividend and income along with the net overseas Unilateral Transfers like gifts, grants, and aids.

In this respect the Current account can be enumerated as Balance of Payments = Reserve Account change + Capital Account + Current Account where the balance of payment signifies the country’s net financial inflow. If the Reserve account is marginalized it could be stated that any impact on the current account would ultimately alter the end result of the net financial inflow and vice versa. The BOP or balance of payment refers to the specific measure that is used to calculate the payment between countries. Within a specified time period it is used to act as a summary of economic transaction of a country in the international arena. Total imports and exports of goods, financial transfers, financial capital and services are instrumental for determination of this balance of payment. As for United States, it makes the adjustment of balance of payment by maintaining the official reserve at a negligible margin. As a result even if there are deficits in the capital or current account there would be no affect on the official reserve as it is maintained at a virtually zero level. Thus, International trade theory rightly suggests that the position of the US in international trade is not very sound.

Works cited

Korten, DC. “Global Economics, Environmental Integrity, and Justice Reflections of an Economic Missionary. NATIONAL COUNCIL OF CHURCHES. (2003). Seattle University. Web.

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