International Business and Globalisation

International Business
and Globalisation
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1) Importance and impact of global trade and globalisation..................................................3
4) Demonstrate an in-depth awareness of contrasting international markets in context of
international business decision making..................................................................................5
5) Analyse and critically evaluate pattern of internationalisation undertaken by international
businesses...............................................................................................................................6
6) Critically apply appropriate knowledge, theories and tools to help formulate a range of
alternative solutions to practical problems in planning for different international markets...8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
International business is defined as process of trading of services, technology, products,
knowledge, capital across national as well as global border (Boussebaa, 2015). This includes
transaction among cross border of products and services among one or many countries. On other
hand, globalisation is defined as procedure of integration as well as interaction between
companies, people and governments globally. Both are part of business to enhance their profit
margins at marketplace. The given assignment is based on Airdri which was established in 1974
at United Kingdom. It is global leader in hand dryer development. Products are designed for
recognised and comfort of their low energy, longevity, reliability, reduced noise. The main
purpose of this report is to discuss about importance as well as impact of global trade and
globalisation for business. It also demonstrate awareness of contrasting international market for
decision making along with pattern of internationalisation taken by global firm. The theories are
used for solving problem in planning of several international markets.
MAIN BODY
1) Importance and impact of global trade and globalisation
Global Trade
It is also called as international trade which is defined as process of exporting and
importing products as well as services across global boundaries (Buckley, 2016). Here, when
goods and service are sold to other countries then it is called exporting. On other hand, when
products are brought from other countries then it is referred as importing. In order to expand
business and increase profit margins, global trade should be adopted by business. Some of the
importance and impact of global trade are described below:
Importance- International trade among various countries is significant element in raising
living standards of people, creating of employment opportunities, assist consumers to have large
variety of goods. According to data provided by World Bank, there is rise in GDP from 12% to
30% in 2015 (The importance of international trade, 2020). Some of the importance of global
trade are as follows:
 Greater Choice for Consumers- Global trade focus on bringing several options for
specified goods and services from different places. It provide consumers with variety of
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options to chose products and purchase it. Airdri should evaluate market first and
according to requirement of consumers they should provide them.
 Employment Opportunities- International trade assist in creating employment
opportunities for people which leads to cut down unemployment rates. If respective
organisation want to expand their business at global market then they are creating job
opportunities.
Impact- Global trade provide both positive as well as negative impact to organisation for
running their activities and operation at marketplace. Some of the impact are as follows:
 Dual Economies- Trade resulted into creation of dual economies in underdeveloped
countries that leads exporting sector to developed whereas other economy of country
remain backward. This is negative impact for countries as well as organisation to enhance
themselves at competitive marketplace.
 Increase in Business Opportunities- It is positive impact to Airdri as it can expand
business in other place where they get new skilled and experience employees for
performance, adopting of different culture and tradition at workplace for better results.
Globalisation
It is defined as growing interdependence of nations that results from rise in integration of
finance, ideas, trade and people at single global marketplace (Cantwell, 2017). This integrate and
interact with firms, people and government worldwide. The importance and impact of
globalisation in context of Airdri are as follows:
Importance- There are some importance of globalisation which assist Airdri in terms of
following:
 Foreign Direct Investment- This leads to rise at greater speed rather than increase in
global trade (Cohen, 2017). FDI assist in boosting technology transfer, restructuring
industry and growth of international organisation. It assist respective organisation to
enhance their business at global level.
 Technological Innovation- Globalisation leads to increase in technological innovation
which assist in improving economic output through making process to be more efficient
and efficient. In context of Airdri, they can move for globalisation and adopt
technological innovation which is required for their products and services.
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Impact- While doing globalisation, there can be positive as well as negative impact to
business for attainment of goal and objectives. Few of them are as follows:
 Competition- It is the positive impact of globalisation which assist in improving quality
of goods and services due to rise in global competition (Cramer, 2017). Customer prefer
high quality goods and services which is required to them. This assist Airdir to
manufacture high quality products and compete with competitors for earning high profits
margins. Along with this, it rise in goodwill and brand value of business at marketplace.
 Job Insecurity- It is the negative impact of globalisation in developed countries as
people faces job insecurity as well as lose employment. As developed countries
outsourced manufacturing as well as white collar jobs that leads to requirement of less
number of people.
Therefore, global trade and globalisation are important for respective organisation to
enhance their business at different market and place in order to raise their brand value, goodwill
and profits margin in an effective and efficient manner.
4) Demonstrate an in-depth awareness of contrasting international markets in context of
international business decision making
For an organisation an in depth awareness is important while choosing international
market and entry mode for internationalizing firm (Davidkov and Yordanova, 2016). However
there is a lack of analysis concerning the decision making process, majorly in context of small
and medium sized enterprises. In context of Airdri which presently serve the consumer electronic
market place with their product hand dryers. Since the electronic revolution hit the market, to
remain competitive required furious investment and innovation to gain growth and opportunities.
The major trends needed to analyse before going into the international market place which
occurs in electronic market are as follows:
Product design outsourcing- Designing of the product plays very much important role
in building perception in the mind of consumer and helps in taking decisions (Ferreira,
Fernandes and Ratten, 2017). In context of Airdri they majorly have to focus on the moving
product design and development processes while operate at global level as it is potential to give
competitive advantage in marketplace positively. In hand dryers by using specialised designers
needed to design their hand dryers very attractively so that they can occupy special position in
market.
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Virtual reality- The another important needed to work on while operate in the
international marketplace which is provide virtual reality to consumers so that they can feel the
advantage of hand dryers of Airdri and easily can take decisions to purchase them. It also used to
improve the manufacturing process and bring efficiency in the product outcome positively. The
technology in the electronic manufacturing industry is often referred to as digital design,
simulation and integration and eliminating defects in the production process in order to produce
effective kind of products for serving consumers positively. So it can be said that respective
factors plays very much important role in enhancing the consumer experience and gain the large
market share positively.
Robotics and automation- In electronic industry role of robotics and automation plays
very much important role in order to improve the plant efficiency and productivity in order to
gain desirable outcomes from them (Groenland, 2018). In context of Airdri they while operate at
global level needed to upgrade in their technology by using various kinds of machines to access
the invaluable data to reducing the breakdowns that save the cost of business and provide
consumers in effective price range. So it is very essential for Airdri to use best tools and
technology by visualizing the competitors strategy to take step accordingly.
It is also potential for them to integrate or collaborate their products with the IoT
technology to make the life of consumers comfortable and convenient. Respective tool has the
interconnectivity with the physical objects and devices that connect with sensors and software to
allow them to allow and exchange data potentially. Collecting information regarding consumers
interest and relevant collection of information in order to take prompt decision in favour of
consumer decision making. So in context of Airdri to operate at global level needed to embrace
respective technological advancement potentially by examining the consumer taste and
preferences. So collection of necessary knowledge and information is very important for
organisation to remain competitive in marketplace.
5) Analyse and critically evaluate pattern of internationalisation undertaken by international
businesses
Internationalisation is referred as procedure of implementing as well as planning goods
and services in order to adopt to particular local culture, language and others (Hanson and et. al.,
2016). It is very important for organisation to adopt pattern of internationalisation for
international business in order to attain goal and objectives. According to opinion of Darpan
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Saxena, 2020, there are different modes of entry into international business such as direct
exporting, joint ventures, strategic decisions, foreign direct investment, licensing, franchising
and others (Modes of Entry into International Business [Advantages & Disadvantages], 2020).
They are described below:
Direct Exporting- It is defined as exporting of products and services to other global
market. This is regarded as fastest pattern of internationalisation for business. The respective
organisation has an opportunity to export their products in other countries with help of direct
exporting mode. It assist in marketing products as well as brand at marketplace. This can provide
benefits to respective organisation to select their international representatives in overseas market.
It assist in protecting goodwill, patents, trademarks and other intangible assets. Similarly, on
other hand, it carry some negative points which leads to increase in cost for business and no
control over distribution of products. Airdri can adopt such pattern of internationalisation for
their business to expand in other market to gain high profit margins.
Joint Ventures- This is also defined as entry mode or pattern of internationalisation for
business which does not share their knowledge, brand and expertise (Hill and et. al., 2017).
Company which want to expand their business into oversea market can adopt such mode with
local firm and sharing of rewards as well as risks in appropriate manner. Here, both organisation
has to share costs, profits, investment, losses at decided proportion. Such types of pattern is
appropriate when government does not allow for 100% ownership of industry at foreign. This
internationalisation is possible for Airdri if other company has common objectives like
technology sharing, joint product development, risk & reward sharing and so on. It is useful in
meeting shortage of financial, managerial and physical resources. It provide benefits in optimum
utilisation of resources and competence of technology. In addition to this, it has some
disadvantages like costly, conflicts and others. While adopting respective pattern of
internationalisation, Airdri has to share their objective with other foreign company and come
together.
Foreign Direct Investment- This is referred as company entering to overseas market
through doing investment in other country. It is possible through merger and acquisitions,
greenfield investment and joint ventures. Airdri can adopt such pattern of internationalisation for
overall development of their firm at marketplace. This can be performed through purchasing
share of company, assets and property. It is the easiest entry mode along with providing option of
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modification at any period of time. On other hand, return on investment is very low and policies
of government are not useful.
Licensing- It is the method that provide permission to business to use their legal
protected technology as well as products for particular time period (Hirst and Thompson, 2019).
This is the easiest method for entering into foreign market which possess less communication
and control. There are two parties such as licensor and licensee where risk is transferred to
licensee for proper utilisation of resources. Airdri can enter into other market through licensing
in order to sale their goods and services in an effective and efficient manner. It provide benefits
in terms of low cost of labour, easy appointment and low involvement of investment. In order to
adopt such internationalisation pattern, time consuming is more and there is decline in product
quality.
After studying various pattern of internationalisation, Airdri should opt for direct
exporting because it is the most easiest and simplest method to enter into foreign market. They
can easily sale their products and services to other countries by following some rules and
regulation of that place in effective manner. This type of mode leads to rise in high profit
margins and attainment of set goal and objectives. Therefore, it is essential to analyse each and
every patterns and as per requirement of consumers and market, they have to adopt it for positive
results. Airdri is small organisation so it is better to adopt exporting mode.
6) Critically apply appropriate knowledge, theories and tools to help formulate a range of
alternative solutions to practical problems in planning for different international markets
While entering into international market, there are different types of problems which can
be arise in front of organisation which need to be resolved through use of knowledge, theories
and tools. Some of major practical problems in planning for different international markets are
described below:
International Company Structure- It is practical problem which is faced by
organisation while entering into international market (Li, 2019). As structure of each and every
company is different from one another which create issue for firm. Airdri is small organisation
and if it want to expand their business in international market then they have to considered
company structure so that they can survive and sustain at competitive market to gain positive
outcomes. In order to solve such issues, Airdri has to adopt situational leadership approach for
solving problems of company structure. Situational leadership is defined as theory which assist
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leader to adopt all types of situation arise at organisation to attain goal and objectives. This is
important theory which should be adopted by leaders who are working in business place at
competitive market. It assist them to prepare them for adopting all types of situation arise at
marketplace for positive outcomes. In case of failure to adopt such theory, respective
organisation cannot attain goal and objectives in an appropriate manner. Therefore, in this way,
problem of international company structure can be solved by adopting situational leadership
approach in proper way.
Currency Rates- The payment methods as well as setting prices are major consideration
for business to expand at international market (Perraton, 2019). Fluctuation in current rate is the
most biggest and challenging problem for international business. Monitoring of exchange rates is
regarded as central part of strategy for global expansion. When there is change in currency rates
at unpredictable level then business has to face huge loss. This can impact balance between
profits and expenses of business. For example, if Airdri wants to expand market in United States
and during that time, there is fluctuation in currency rates then they have to bear loss. In this
case, they can protect themselves from huge fluctuation in currency by paying their suppliers as
well as production cost in same currency in which they are selling to them. They can also adopt
other option to mitigate risk of unpredictable exchange of currency rates by setting agreement
and contract of price in advance for future sales at marketplace. This provide benefit to
respective organisation by providing high profits in their favour. This can protect sales of
business from risk occurred by unstable currency. This problem should be identified by business
in order to provide appropriate solution in an effective manner.
Communication difficulties and Cultural Differences- The effective communication is
regarded as heart of international business (11 Biggest Challenges of International Business in
2017, 2017). It is very difficult to perform communicate across culture. Communication and
culture difference is practical problem which is faced by business which is expanding their firm
at international market. In order to achieve success and growth, effective communication with
clients, customers, suppliers is required. As per understandable form of communication,
respective organisation has to use proper communication channel in order to attain objectives of
firm. Before expanding business at international market, it is essential for Airdri to analyse
market, spoken language, culture so that they can adopt it. Cultural differences can easily
influence market demand for goods and services. In order to solve such issues of communication
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and cultural difference, they have to adopt Hofstede model. This is framework of cross cultural
communication that was founded by Geert. It has six components such as power distance index,
uncertainty avoidance, masculinity vs femininity, indulgence, term orientation and individualism
vs collectivism. According to arise issues, problem should be solved in effective manner.
Apart from these problems, other can be foreign laws and regulations, universal payment
methods, global pricing strategy, political risk, choosing right shipment methods. These are faced
by all business who are expanding their business at international market. Organisation has to
analyse them properly and make decisions in better way for attainment of goal and objectives.
CONCLUSION
From the above report, it has analysed that international business and globalisation are
part of organisation which they have to perform for earning of high profit margins. It is essential
to understand importance of global trade and globalisation because it creates employment
opportunities for employees, innovation in products and so on. This provide both positive as well
as negative impact to business in terms of rise in price, losing job security and many more. In
order to make international business decision, it is crucial to understand opportunities and trends
at marketplace so that organisation can attain set goal and objectives. For international business,
there are different patterns of internationalisation which can be adopted by organisation such as
joint venture, exporting, licensing, franchising, strategic alliance, foreign direct investment and
many more. There are several practical problems arise due to internationalisation like change in
currency rate, company structure, difference in culture, communication difficulties, payment
methods and so on. These should be solved through using of different knowledge, method,
theories and tools so that proper outcomes are achieved.
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business. Routledge.
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11 Biggest Challenges of International Business in 2017. 2017. [Online]. Available through:
<https://www.hult.edu/blog/international-business-challenges/>.
Modes of Entry into International Business [Advantages & Disadvantages]. 2020. [Online].
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The importance of international trade. 2020. [Online]. Available through:
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