Doctoral Level MIB867 International Business Assignment, May 2019

This document presents a comprehensive solution to an International Business assignment, addressing key aspects of globalization and international trade. Part A explores the changing parameters of international business in globalized markets, providing examples of multinational corporations operating in Asia. It also delves into international trade and investment theories, evaluating their ability to explain business trends, with specific focus on Malaysia's competitive advantage in electrical/electronic goods and China's in exporting rubber shoes. Part B likely explores the application of these concepts in a practical business scenario. The assignment covers the impact of globalization, the evolution of international business, and the role of various economic factors, including foreign direct investment and the influence of multinational companies. It offers a detailed analysis of the subject matter, supported by relevant examples and theoretical frameworks. The document is a valuable resource for students studying international business, providing a deep understanding of the subject matter.

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
Name of the Student:
Name of the University:
Author Note

1INTERNATIONAL BUSINESS
Table of Contents
Part A.........................................................................................................................................2
Answer to Question 1:-..........................................................................................................2
Answer to Question 2:-..........................................................................................................6
Part B........................................................................................................................................10
Answer to Question 1:-........................................................................................................10
Answer to Question 2:-........................................................................................................16
References................................................................................................................................17

2INTERNATIONAL BUSINESS
Part A
Answer to Question 1:-
The twentieth century saw the remarkable progression in every aspect of the human
life. For few instance, the human got the access of the basic infrastructure like potable water,
transport vehicles, electricity and telephone. This century also witness the several inventions
which changed the way of living of the entire human like television, computer, internet, life -
saving drugs, aircrafts and several others (Meyer & Peng, 2016). On the other hand, the
world also experienced several significant movements which arises the standards of living of
the several countries and established the development in those countries which helped the
international business to improve and grow much faster than the expectation. With the help of
the some important political movements towards the democratic rule which opens the great
acceptance of the market based economic system.
The international business is defined as “the transaction that are devised and carried
out across national borders and mainly takes the form of export and import trade and direct
foreign investment.” Apart from that several type of the international business are the
licensing, management contract and franchising.
The international business has existed since the national borders are formed. Along
with that international business shown the development through - out the history with greater
peace and security, economic prosperity along with the technical growth. While, the
globalization is defined as the “process of the free trade and economic integration influenced
the international business in a more preformed way.” However this was interrupted due to the
first war. Although in post war the international business reported the tremendous growth and
impacted the firm, nations and individuals (Tian, (2016). In the last phase of the twentieth
century the international business in the goods and services expended from $ 200 billion to

3INTERNATIONAL BUSINESS
more than $ 6.8 trillion in last 30 years of the century. The entire internal business is
accelerated in the last 2 – 3 decades.
The globalization process bring the several major changes in the basic parameters of
the international business. Some them are follows: -
 Globalization of Production
The decreasing cost of the transport as well as the advances in the international
business, inspired the local business to sell their product both goods and services in the
other countries to enjoy the benefits of differentiate cost and quality. Today, the many
companies produces the product just for the other countries and export them in the
various other countries (Lawton, Rosenau & Verdun, 2018). The production firm or the
companies related to the manufacturing of the aircrafts, automobiles, computers are the
best example of such type of companies. As the globalization of the production is
increased the national identity of such products are also fading away.
 Globalization of Market
The globalization in the market, emerges the every national market into one huge
market place. In respect of the consumer preference, the process of globalization in the
market is being further promoted (Cravino & Levchenko, 2017). In the starting of the
globalization in the market, only the market related to industrial goods and material were
global but now the globalization in the consumer goods and products are also become
global as well. The best example of such companies of this global market are the fashion
clothing, luxury cars, aircraft services, coca cola and like.
 Demographic Factor

4INTERNATIONAL BUSINESS
The world output and the trade picture has been changed in the last 30 years. In the
year of 1960 the United States reported the 40.3 % of world’s total output which
decreases to 22 % in the year 2000. The same situation is observed with the other
dominating countries like Germany, France and UK. This changes in the contribution of
dominating countries in the world output that the several other economies grew faster
specially in Asia including Japan, Taiwan, Malaysia, China and South Korea. Similarly,
the dominance of United States shifted to the Germany, Japan and Newly Industrialized
Economics of Latin America and Asia. The two countries of Asia, China with the largest
population showed the fastest growth in the international business and the second one in
India which also showed the good development in the last past years and have the high
potential of growth in the near future (Constantinescu, Mattoo & Ruta, 2015). In this type
of changes continues in the future, then the economic geography will dramatically
change. The many of tomorrow’s opportunities may be found in the developing
countries.
 Changing Foreign Direct Investment
The highest foreign direct investment flow is accounted by the United States in the
1960 of 66.3 %. The British were the second in this list with the total percentage of 10.5
%. By 2000, world’s top 7 national foreign direct investments were the USA, Germany,
Belgium, Canada, Netherlands and France. On the other side, the receiver of the foreign
direct investment is mostly the developed nations like US, European Union and Japan.
While, the developing countries only receive the 20 % of the total foreign direct
investment, China were the topper in this list. One of the main stimulus behind the FDI
also include the cross border mergers and acquisitions. Least developed countries
received the negligible proportion of the total FDI inflows. The analysis of the FDI
Location’s driver shows that “natural resources and unskilled labour and national

5INTERNATIONAL BUSINESS
markets to skills, technological capabilities, supply networks, good logistics and strong
support institution to attract FDI. This changing trends in the foreign direct investment
does not beneficial for the least developed countries and even the most developed
countries.
 Role of Multinational Companies
As per the information provided by the World Investment Report, the top 100 MNCs
of the world only have the 3 companies from the developed countries. The rest 97 MNCs
are from the European Union, North America, Japan and others. The MNCs have total of
$ 2.1 trillion in their assets and the sales figure of those are also same while, the total
employment of these companies was 13.3 million. The studies shown that the foreign
dimension of their activities rose from 51 % in 1990 to 53 % in 1999. The operating
environment are the liberal policy which insure their trans - nationality will increase
more in the future (Cohn, 2017). The World Investment Report also prepare the top 50
largest MNCs and 70 % of these are from the South – East Asia. These 50 companies
had $ 531 billion as assets and 1.1 million employees.
 Changing World Order
After the collapse of the Soviet Union, the many nations of Europe and Asia seen to be
committed to democratic politics and free market economy which were the formerly the
communist nations. If this can be properly materialized then the opportunity of the
international business become tremendous (Brenton & Pelkmans, 2016). Similarly, in
China and Latin America the market are being opened up for the foreign business and
investments. China and India, together offer a big market of export and investment in the
international business. If the tree trade and the economic liberalization become
permanent in Russia and the CIS countries, Eastern Europe, China and India, the global

6INTERNATIONAL BUSINESS
economy is expected to become stronger and more competitive. Although, the production
structures and the trade links will change drastically, favouring those countries which
turn out to be more competitive and attractive to the investors.
Answer to Question 2:-
The international trade theories are nothing but the different theories to explain
international trade. The trade is the concept of exchanging the goods and services between
two peoples and entities. Hence, the international trade is the concept of exchanging the
goods and exchange between two peoples or entities of two different countries. People do
exchange the goods and services because they believe that they will be benefited and the
want or need for the goods and services (Feenstra, 2015). After that the various economist
developed the various theories to explain the operations of the global business and trades.
This theory also developed as per the market requirement time to time. Currently, the major
theories of the international trade is divided into the two segments. First one is the Classical
Country Based Theories which includes the theory of Mercantilism, Absolute Advantage,
Comparative Advantage and likes. The second on is the Modern Firm Based Theories which
includes Country Similarity, Product Life Cycle, Global strategic Rivalry and likes.
Although the various theories related to the international trade and businesses are
there, but still none of them properly defines the trend in the businesses adequately. All the
theories related to business explains and analysis the various aspect of the business regarding
their profitability, competition, competitive advantages, internal strength and weakness,
external factors and various other but the business trend cannot be properly explained by any
theories because the business trend does not talks about the past performance of the business
and fully a future based term (Viner, 2016). Defining the future is not possible for anyone as
it is very flexible and depends not only in the various aspects of the business but also includes
various other aspects which is not possible to analyse. The other things is the uncertainty, the

7INTERNATIONAL BUSINESS
future of the business or of anything is very uncertain, people can only made the prediction of
it. Hence, the one of the most difficult challenge for any business is to prepare for the future
as the knowing what lies ahead, even with the most through research and best available
information, is hardly a science. Tomorrow always remains a mystery hence the business can
only make the plan and predictions and hope for the best as well as prepare for the worst
(Feenstra, 2015). Hence, to analyse the future trend in the business, the internal assessments
is more important than the other outsider’s theories. The nature, progress, operation, patience,
believe, competition and various other internal factors of the business forms the trend of the
business in the future.
The Globalization has led to the integration of economic markets. This refers the rapid
development of the production and business by enhancing the technology. In today’s
scenario, the major products are seldom in one country and located in the various other
countries. On other hand, this globalization bring several constant change like technologies,
products, market, customers need and preferences, environment of business, competitors all
are changing. The technology and information system in the home countries and in the
abroad is vast and complex. According to the United Nations Trade and Development Report,
2000, overall 30 % of the world’s merchandize export is observed in the global market out of
them mostly are dominated by the big multinational companies (Feenstra, 2015). The
production cost of these merchandises is being reduced by the low transport cost and the
rapid growth in the information and communication technology. In the liberalized and open
global economy, the competitiveness of the firm has also increased as the firm not only with
the firms but also with the entire production system of the firm including many firm of
various countries and locations.
Malaysia is one of the fast integrators in the World economy. The country has
adopted an open policy to foreign trade and investment and made remarkable progress in

8INTERNATIONAL BUSINESS
economic growth, education, investment and infrastructure development. To attract the
foreign direct investment in country. Malaysia adopted the export – led growth strategy.
Hence, the country achieved phenomenal progress in the growth in exports. It can be proven
by observing the export data which was valued around 3 billion in 1973 and become around
98 million in 2000. In the terms of the ranking in the world’s export, Malaysia was in 35th
place in 1973 and in 2000 it became in 18th rank. In total 84 % of the total export of Malaysia
consist the manufactured goods category (Cumming & Zahra, 2016). The largest
contribution in this export is made by the electrical and electronic products and consist the 66
% in the total exports while this electrical and electronic products are mainly produced by the
foreign companies. Mainly, this products are exported in the markets like Singapore, Japan,
European Union, China, USA and Singapore. Malaysia create the electronic product empire
by adopting the open market policy. As discussed above it the biggest electronic producer in
the world but they are not Malaysian company. The maximum electronic product are
produced in Malaysia is manufactured by the foreign companies by setting up the
manufacturing plant in Malaysia.
The several commercial institutions like the WTO, AFTA and others will further
liberalize the trade with the intention of the competition in both the domestic as well as in
international markets. The economic development of the countries like China, India and other
Asian countries also increases the competition for the Malaysia. To fight with this
competition, Malaysia developed the national competitiveness in the global market. For this
the Government of Malaysia developed the pro – business environment to support the wealth
creation. The business firms of Malaysia increases the efficiency and the productivity by
promoting the fuller use of the available infrastructure and improving the delivery system.
The every firm of the industry focused to increase the production to minimize the production
cost and by increasing the quality of the products and services (Laursen, 2015). In this

9INTERNATIONAL BUSINESS
scenario, the local and small production firms also increases their marketing capability and
develop their direct access in the export markets.
The firm competitiveness can be defined as the “ability to produce goods and services
that meet test of international competition, while the citizens enjoys a standards of living that
is both rising and sustainable.” There also other definition of the competitiveness of firm is
available but all the expert agrees in the consensus that competitiveness of firm, industries,
nations and regions is an important feature of the world influences. This not only affect the
pattern of the production, investment and trade but also influence the standard of living of
many relative countries. The firm competitions is different from the national
competitiveness. Firm gains at the expense of other firm when competing (Alviarez, 2019).
This is also true that when the firms are not competitive, they will be out of business, though
the countries may still exist. In the competitive business world of today, firm competitiveness
has become more complex as firm may compete in quality, price as well as in customer
services. The following outside factors influence the competitiveness in the business: -
 Business Environment: - The national business environment constantly influence
the ability to compete. The national environment positively affects and encourage the
competition among the firms and provides incentives for investment, enterprise and
innovation. Both in the Malaysia and China the positive business environment help
them to increase the export of the electronic and electrical product and the rubber
shoes.
 Role of Government: - The other important aspect of the competitive advantage is
the government policies. If the government policy is positive then the firms will get
the competitive advantages. Again in the both countries that is Malaysia and China
the government policies are specially designed for the foreign trade hence the both
countries enjoys the competitive advantages while exporting.

10INTERNATIONAL BUSINESS
 Network Alliances: - Firm can improve their competitiveness through the
networking and alliances. These can also be used in the research and development for
the new products, create the new market and to meet the customer needs (Costinot et
al., 2015). As we all known, Malaysia is the one of the larger exporter of Asia hence
he has strong network alliances while the China is the emerging country in the
international trade so it also have a good network alliance. This helps them both
countries based company to connect with the companies of other countries and to
form the alliance. This is also an important reason behind competitive advantages of
both companies to exporting electrical product by Malaysian companies and rubber
shoes exporter of the Chinese companies.
 Innovation Capacity: - The other important factor which influence the competitive
advantages in the business. The firm is good enough to develop the new and the
innovative product by using the latest technology then the companies always get the
competitive advantages. If we talks about the Malaysian electrical products,
Malaysian electrical companies are best in innovating the electronic products. On the
other hand, the China is also one of the best country to produce the innovated rubber
products. Hence, both companies of both countries get the competitive advantages.
Part B
Answer to Question 1:-
Prospect of furniture business in Dubai
The furniture industry is getting popularity in the Middle East as the real estate
business is expanding in large number. The demand for sophisticated furniture is growing
rapidly and the furniture industry is doing all possible efforts to grab the opportunity of the
growing demand of the furniture business in the Middle East. The Middle East countries are

11INTERNATIONAL BUSINESS
giving importance to the furniture business, as the potential of the business in the coming
future will grow with significant pace. Dubai is one of the most renowned countries that have
made huge business in the real estate sectors. There are several unfurnished apartments and
hotels and restaurants in Dubai which will require furniture and other interior decoration
items, and this requirement creates a huge market for the furniture business in this country
(Dong Liu & Zhao 2018).
The real estate business is expanding rapidly, and as an ancillary to the real estate
business, the furniture business is also rapidly growing in Dubai. Offices of various
companies are established in Dubai and that creates a huge market for the supplier of the
office furniture and to grab the opportunity that Dubai creates for the small business units that
are engaged in the manufacture of furniture.
As per a recent research, it has been observed that the furniture market is expected to
register positive compounded annual growth rate of 5.6 precent during a period of 2018 to
2022. The rise in the online market player accelerated the demand for the wooden products
and accessories are expected to have an impressive impact on the overall revenue of the
furniture market of Dubai (Coulson-Thomas 2019).
Dubai is going to add 40000 new hotel rooms and service apartments to meet the
growing demand of tourists following the expo 2020 in Dubai, which is a for a period of 1
year from 2020 to 2021. It has been observed that 70 precents of the timber and wood
products are used for the construction purpose while the remaining 30 precent is used in real
estate, interiors, furniture, and other industry applications (Susanty et al 2017).
The furniture market in the Dubai region is highly competitive owing to the
increasing demand of the of the furniture and furnishing products. The rise in the demand has
led to the increasing domestic demand and this lead to the increase of more competitors in the