International Business: Importance, WTO, and Trade Mechanism

This document provides an overview of international business, focusing on the importance of trade in the contemporary business environment. It discusses the formation and functions of the World Trade Organisation (WTO) and examines the opportunities and challenges faced by international companies as a result of the WTO trade mechanism. The document also explores how external global forces impact market entry strategies in international business.

International Business

EXECUTIVE SUMMARY
Trade in business is important as it help in providing opportunity to expand at wider scale.
In business sector, trading of goods and products is done at larger level. With this contemporary
business environment, it has become crucial to focus on development of organisational goals in
proper manner. So, WTO is organisation that regulate the trade policies and procedure to make
assure everything is carried out in legal way.

Table of Contents
EXECUTIVE SUMMARY .................................................................................................................2
INTRODUCTION ...............................................................................................................................5
MAIN BODY ......................................................................................................................................5
LITERATURE REVIEW.....................................................................................................................5
Critical discussion and analysis ...........................................................................................................7
Briefly explain the understanding of motivations behind formation of WTO................................7
Analyse and describe functions of World Trade Organisation .......................................................8
Critically examine opportunities and challenges that international company have as result of
WTO trade mechanism ..................................................................................................................9
Explain how market entry strategies are affected by external global forces .................................9
Briefly discuss effectiveness of WTO in policing global trade ....................................................10
Critically review of relevant and up to date literature from a range of credible sources .............11
CONCLUSION ..................................................................................................................................11
REFERENCES...................................................................................................................................12
Books and Journal: ........................................................................................................................12

INTRODUCTION
Business sector is wider as well as broader and is expanding at larger scale. In this
competitive market, every business and organisation aims at achieving of higher profit and revenue
(ayafuji, 2020). Main aim of this report is to understand the importance of international business in
this contemporary business environment. International business is to be defined as carrying of
exchange process of goods and products across the borders. WTO, a organisation that focuses on
regulation and facilitating of international trades between nations. It is headquartered in
Switzerland and has was formed in 1 January, 1995. In this organisation, three languages are being
spoken such as English, French and Spanish. WTO is also known as World Trade Organisation and
it has 164 members states. This report comprises of understanding of motivation behind formation
of WTO, role of global institutions in global trade, opportunities and challenges international firms,
market entry strategies, effectiveness of firm in policing global trade, review of literature.
MAIN BODY
LITERATURE REVIEW
According to the viewpoint of (Kim, 2019) the business sector comprises of national as well
as internal business. International business is a critically process which is to be carry out with
proper considerations. It is not easy for an enterprise to execute the activities when it comes to

international level. In this contemporary business environment, it has become essential to focus on
development of organisation and its activities in order to achieve competitive benefits easily. It has
been also analysed that in accessing to foreign country is not easy which require high level of
knowledge and expertise. Moreover, there are many legal procedures, processes which hare to be
completed and adopted by entity which is focusing on entering into foreign countries. The
international business require proper focus so that trade procedures are processed in appropriate
manner. Main reason for international business is that it helps in expansion and diversity of various
business activities, produces high quality of goods as well as services etc. Thus, by entering into
foreign market leads to being ahead in market and achieving of benefits easily.
This has been examined that earlier to the formation of World Trade Organisation, GATT
was only firm which played the role of managing trade at international level. In market, without
accessing to trade it is not easy to access resources, customers in correct way. Main benefit of
managing trade and process are that it enhances the level of competition and it allows customers to
increase their purchasing power and obtain advantage.
With considering opinion of (Kurt, 2020) that role of WTO is wider and every activity,
barriers, or problems related top trade are managed by organisation. Also, enterprise help in
accessing to other firms trade policies and procedures and make assure that every activity associated
with trade is being executed with proper consideration of governmental laws or regulations. Due to
involvement of many people in process of trade, chances of conflicts are likely to arise at larger
scale. It is too stated that World Trade Organisation conduct a deep level of scanning of
environment on the basis of which it is easy for them to analyse the trade procedure which are
rolled out in market. With change time period, it has become crucial for entity to access and analyse
way goods or products are being exchanged.
Main rational for formation of WTO was hat founders of firm were focused as well as
concerned about how the trade procedures are carried out and activities are done in fair manner or
not. Furthermore, accessing to international businesses require a wide market research analysis as
well as application of other practices whether they are beneficial or not. It is critically important to
focus on implementation of strategies so that it is easy to execute and carry out the international
processes in effective manner. Furthermore, it has been evaluated that different forms of trade
which are export, import and entreport trade. It is necessary to access the competitive advantage in
market so that goals are accomplished easily. There are many internal firms such as Pepsi, Coca-
Cola, McDonald's etc. It is necessary to states that detailed information is needed to manage and
maintains trade at international aspect. Most of firms assure that correct type of decisions are
undertaken so that benefits are achieved appropriately. The international business is being affected

by five factors such as culture, economic system, economic conditions, exchange rates, political risk
and regulations. With focusing of these factors, business at international level are executed in
appropriate manner (LIFANOVA, 2018).
WTO is governed by government of Switzerland and focuses on protecting of intellectual
property rights. Due to expansion of businesses and their activities, it is necessary to focus on
protecting of trade processes form illegal procedures so that issues or problems do not occur. It is
duty of organisation to properly follow all the rules as well as regulations so that everything is being
executed in systematic and appropriate manner (Malyarets, 2019). Furthermore, it is crucial to be
aware of changing market situations so that it is easier to execute the trade activities with effective
manner. This has been analysed that without conducting of legal procedures and policies, it is
difficult to for firm to international market. In trade, suppliers play crucial role in development of
international businesses. This is because it is not easy for a firm to reach to customers and access
market without involving of vendors within business. Furthermore, with formation WTO it become
easy for many firms to carry out their trade procedures in efficient manner by properly following
government rules as well as regulations. There are various types of international businesses which
are licensing, franchising, import and export, outsourcing offshoring, joint venture, strategic
partnerships, etc. It depends in entity to select most appropriate form of international business so
that goals and benefits are achieved in easy way.
On the basis of these different types of businesses, trade procedures are carried out and
accordingly decisions are undertaken. It is being stated that knowledge is to be increased when
processing and exchanging goods and products into foreign countries regarding different laws,
policies etc. Furthermore, scanning of environment is needed to be done as it helps in gaining new
information of in correct way that can used within trade procedures. There are basically six
objectives of WTO which are setting rules for international trade, resolving trade disputes,
increasing transparency in decision making. This enterprise encompasses all types of goods as well
as services and some investment policies (McDougall, 2018).
Critical discussion and analysis
Briefly explain the understanding of motivations behind formation of WTO
In business, trade play important role as without which it is not easy to execute the
operations or function in proper manner. Trading is a time consuming process which is needed to be
carried out with proper considerations. On 1 January, 1995 World Trade Organisation cam into
existence. Prior to the development of the organisation, GATT was responsible for managing and
maintaining of trade and other regulations.

The level of international business is increasing and also they are aiming towards accessing
to foreign countries. This is possible when relevant information is gained and processed are being
executed in most effective way. There mare various reasons behind the formation of WTO which
are expanding the trade procedures, protecting the rights of suppliers and traders, resolving disputes
between local, national and international trade. It is important to have appropriate knowledge in
context of foreign countries so that better and effective strategies are implemented. Main motive of
WTO is to protect the processes of trade (Paine, 2018). In this competitive era, it is necessary to
follow all rules as well as regulations so that entering into internal country become more easier.
Motivators who formed enterprises focuses on managing barriers at international trade to improve
positive relationship between countries. In trade countries, like U.S, China, India, United Kingdom,
it is difficult for them to do supply of goods or products without use of negotiation as tool with
consideration of World Trade Organisation. So, it is crucial to execute the trade activities within
business by accepting and considering of all policies regulated by WTO. Moreover, motivators who
formed WTO assures that any enterprise which do not execute trade activities according to laws will
be punished or strict actions are to be taken against such firms.
Analyse and describe functions of World Trade Organisation
With development as well as formation of WTO, many firms were able to access and
execute their businesses in well effective way. Roles and responsibilities of this enterprise is applied
and fulfilled at international level. There are different types of functions which are being fulfilled by
WTO and are mentioned as follows-
 Administering of trade agreements- It is one of the most important function which is to be
focused by WTO. This functions states that managing and maintaining of agreements so that
agreements between local and international countries are processed in appropriate manner
without facing and issue or problem. Through administering of trade agreements, it is easy
to execute the business activities in proper manner. When an agreement is properly
managed, it become easy to carry out trade policies (Shams, 2020).
 Trade negotiation- It is also crucial function of WTO which is to be properly adopted and
carried out. This functions depicts that whenever any decisions are made between trade
parties negotiation is essential which is to be managed in proper manner. So, WTO ensures
that forum of trade negotiation is processed. With consideration of this function, it helps in
making process of trade more simpler.
 Solving of trade disputes- This is too important function of WTO which reflects that when
business and trade across the borders is carried out conflicts and problems does occur. It is

necessary to solve them so that objectives are achieved. So, in relation of chosen firm they
make assure that appropriate kind of solutions are provided so that trade disputed are solved
in appropriate way (Van Assche, 2018).
 Reviewing national trade policies- It is too crucial function in which it specifies about
analysing and reviewing of trade policies which are important for business functions as well
as operations. By checking national trade policies, it is easy to for organisations to make
decisions about the businesses in correct way.
 Building trade capacity of developing economies- In this function of World Trade
Organisation, main role of firm is to increase the capacity of developing countries by
accessing to trade business in proper manner. Moreover, it too helps in enhancing of
economy capacity at higher level.
 Cooperating and coordinating with international firm- In this function of Word Trade
Organisation, it states about cooperating as well as coordinating with international
companies. In trade procedures, it is necessary to be aware about how to manage and
cooperate with international companies so that it is easy to achieve benefits in easy way. So,
manager of WTO ensures that strategies and tactics are used in order to manage the
relationships between international entities in appropriate manner.
Critically examine opportunities and challenges that international company have as result of WTO
trade mechanism
In international business, the risk involved is mostly high and also it is necessary for
enterprises to analyse those risk as well as opportunities so that goals are accomplished.
International firms when enter into foreign countries are likely to encounter many problems. So,
different types of opportunities and challenges are discussed as follows-
Opportunities
 When WTO trade mechanism is focused international firms have various opportunities like
they are able to access resources as well as suppliers in proper manner without facing any
problem.
 Another opportunity is that it is easy for international firms to enhance the mechanism of
trade by properly following rules and regulations (Yang, 2020).
Challenges
 Main challenge which is faced by international company is that with change trade
mechanisms and policies of WTO can leads to change of operations of organisation.
 Another challenge is that international companies find it difficult to make decisions when it
comes to execution of trade procedure as it is time consuming process.

Explain how market entry strategies are affected by external global forces
Market entry strategies are critical to be focused so that decision to access international
market become easier. These market strategies are affected external global forces which are
explained as follows-
Market size-
It is kind of a global force which impacts on market entry strategies. This is because when
strategies are implemented and adopted, size of market matters a lot. For example- U.S, Europe,
China are to be viewed as large market size for business. This makes it difficult for firms to select
the market entry strategy (ayafuji, 2020).
Government regulations
It is also another factor which impacts on market entry strategy for example there are
different government regulations on every country and is is not easy to follow every rules of
legislations. So, firm selecting market entry strategy encounter problem as not every strategy can
follow government regulation at every level.
There are different types of market entry strategies which are mostly adopted which are discussed
below-
Franchising-
It is to be viewed as most effective form of strategy which is used in which it is defined as
process through which franchisee allows franchisors to use their product or a brand name and run
business in different countries.
Advantages
 Main benefit of this market entry strategy is that firms find it is easy to expand their
business at larger scale.
Disadvantages-
 Limitation of this strategy is that it is cost expensive procedure and can leads to disruption
in decision making of firm.
Import and export-
It is another type of market entry strategy that can be used many enterprises in which it
product and service are exchange within another country. Import and export are mostly used as
they are highly effective methods of entering into foreign countries.
Advantages

 Main benefit of this entry strategy is that a strong network channel distribution and
relationship is developed when this method is used (Kim, 2019).
Disadvantages
 Due to involvement of many people, it can leads to problems and issues in further processes.
Briefly discuss effectiveness of WTO in policing global trade
WTO aims at managing and maintaining of trade policies at international level. It is
essential to analyse the effectiveness of of WTO so that better decisions are made. The level of risk
related ton international organisation is relatively high. So, risk minimisation is important to
execute all activities in correct way. There are various methods which are available to international
companies when managing risk. So, various type of methods are given below-
 Performance management- It is most effective method which can be used by international
entities in which by analysing and reviewing of performance management assist in
producing of better decision making. Also, it help in improving the areas where
improvement is needed at priority level.
 Considering WTO policies and rules- This is also essential method which is used for
minimising risk as in this by properly following all rules and regulations, international firms
find it easy to reduce and avoid the risks.
Thus, above discussed methods are to be used to reduce risk in effective manner. Moreover,
it is too examined that effectiveness of WTO in policing global trade is beneficial as they help in
regulating of trade in legal way (Kurt, 2020).
Critically review of relevant and up to date literature from a range of credible sources
After reviewing from literature review, it has been analysed that it is essential to focus on
policies of trade and regulations so that it is easy for entities to be well aware about regulating of all
the trade procedures in appropriate way. In this flexible market, it is not easier for international
entities to make decisions and strategies.
Without following of credible sources and information, it is not easy for entities to adopt
effective methods. It has been also analysed proper decision making is required without which it is
not easy to achieve goals or objectives. According to viewpoint of (LIFANOVA, 2018) a critical
analysis is needed so that it is easy to adopt effective tactics for development of objectives. WTO is
important enterprise without which it is difficult for entity to access competitive benefits and
execute their trade activities.

CONCLUSION
After a brief analysis of above report, it has been concluded that the concept of international
business is larger and broader which is to be understood with proper considerations. So, discussions
have been made about formation of WTO, role of global institutions, challenges and opportunities
through WTO mechanism, market entry strategies, effectiveness of WTO policies and review of
literature review. It has been examined it is necessary for firm to access international market so that
competitive advantage is achieve within period of time. Furthermore, manager of firm need to be
well aware of every trade and other activities which are processed into foreign countries so that
issues does not arise. It is critically important to focus on changing of market situations as it assist
in development of marketing activities without facing any issue or problem.
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