Importance and Impact of Global Trade and Globalization

This study explores the importance and impact of global trade and globalization on businesses, with a focus on Mercedes. It also critically describes the concept and theories linked with international business and evaluates different international business strategies used by Mercedes.

International Business
and Globalization

Table of Contents
INTRODUCTION...........................................................................................................................1
Importance and impact of global trade and globalization......................................................1
Critically describe concept and theories link with international business..............................1
International business strategies.............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Current study is based upon Mercedes which deal in automobile sector. Study provides
importance and impact of global trade and describe analytical tools that associated with
international business. Further, report also critically evaluate different international business
strategies used be Mercedes.
Importance and impact of global trade and globalization
 Globalization helps to generate more international trade option and also lower down the
cost of living, which in turn creates positive impact upon business and country's
performance.
 Assist to raise economy of country and provide high quality of goods and services, this
in turn leads to more wealth in the world (Beck, 2018)
 Free flow of technology assist business to meet the demand of customers and generate
large customer base.
 Additionally, through global trade, Mercedes boost up the average growth rate o
country's economy and improve its current financial performance by using effective
resources.
Overall, through globalization, companies get higher quality of goods and services in
better manner. Also, allow company to pool all the resource together and improve
communication access as well (Pieterse, 2019). This summarizes that globalization provide
positive impact upon business and economy.
Critically describe concept and theories link with international business
 PEST: It consist of Political, economical, social and technological factor that assist to
determine external environment which affect performance of Mercedes while operating
internationally.
Relevance Pros Cons
This theory or concept helps
company to determine the
external environment of
company or outer trend that
may affect business while
 Cost effective method
 Deeper understanding
 Exploit opportunities
 Only depend upon
outer resources that did
not helps to generate
valid results.
 Not sufficient to
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operating international level. determine external
environment
 Porter Five force Model: It comprises of five element i.e. Threat of substitute, Threat of
new entrant, Competitive rivalry, Bargaining power of customers and Bargaining power
of suppliers, that assist to identify the profitability of an industry (Perera, 2017)
Relevance Pros Cons
This model assist to
identify the competition
trend in market. Therefore,
model analyze intensity of
forces that affect industry.
 Provides snapshot of
environment.
 Provide real idea of
competition trend
 It did not address
broader business issue
in a multinational
market place.
 SWOT Analysis: This model helps to determine strength, weaknesses, threats and
opportunity of company/ or identify internal position of Mercedes.
Relevance Pros Cons
Assist Mercedes to determine
internal position (strength,
weakness) of company so that
it will easily establish into new
country.
 Helps in multi-level
analysis and cost
effective method.
 Provides opportunities
option for a business
(Moreno-Izquierdo,
Ramón-Rodríguez and
Perles-Ribes, 2016)
 Completely reliable on
data and entail to
subjective process.
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International business strategies
Exporting: It means selling the product directly into market through effective mode of
transportation. In this method, agents and distributor work closely and also provide view of
choice of agents and distributors.
Pros:
 Helps to reach wide market without any extra investment
 Cost effective method.
Cons:
 The administration cost may affect the overall international business strategy in opposite
manner because company have to deal with export regulations while trading outside.
 Did not applicable in home market and this may lead to lose of some control (Watson
and et.al., 2018).
Franchising: It is the form of a business through which an owner (Franchisor) obtain
distribution through affiliated dealers. It means that buying an existing business in another
country that helps to attract customers.
Pros:
 Risk of business failure may reduce and product and service will have already established
market share.
 Helps to use a recognized brand name.
Cons:
 Cost may be higher.
 It includes many restriction of franchise agreement.
 All profit must be shared with a franchisor.
Joint venture: Another strategy which involves creation of third independent managed
company in which two companies agree to work together in a specific market in order to create
another company (Different market entry strategies 2019).
Pros:
 This method is flexible in nature.
 All the profit and expenses must be shared with each other.
 There are many ways to exit a joint venture strategy.
Cons:
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 Clashes in culture and management style affect business profit.
 It provides limited outside opportunities.
CONCLUSION
By summing up above, it has been concluded that globalization provides positive impact
upon business performance. Study concluded that there are many theories that link with
international business such that PEST, Porter five force, SWOT analysis. Lastly, there are range
of entry methods which Mercedes may used i.e. Franchising, Exporting, Joint venture.
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REFERENCES
Books and Journals
Beck, U., 2018. What is globalization?. John Wiley & Sons.
Pieterse, J. N., 2019. Globalization and culture: Global mélange. Rowman & Littlefield.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Moreno-Izquierdo, L., Ramón-Rodríguez, A. B. and Perles-Ribes, J.F., 2016. Pricing strategies
of the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics.22(2). pp.293-310.
Watson IV, G. F. and et.al., 2018. International market entry strategies: Relational, digital, and
hybrid approaches. Journal of International Marketing.26(1). pp.30-60.
Online
Different market entry strategies. 2019. [Online]. Available through:
<http://www.tradestart.ca/market-entry-strategies>.
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