International and Global Business: Economic Impact Report

This report delves into various facets of international and global business. It begins by examining the impact of Foreign Direct Investment (FDI) on economic development, analyzing its costs and benefits for both home and host countries, including effects on employment, balance of payments, and market competition. The report then explores localization and globalization strategies, discussing how businesses adapt to local markets and the advantages of global standardization. Business ethics are addressed, with a focus on managing risks in the supply chain, particularly within the clothing industry, and the effectiveness of various risk management strategies such as certifications, audits, contracts, and incentives. The report further investigates the role of exchange rates, comparing fixed and floating systems and their implications for monetary and fiscal policy, speculation, and trade balances. Finally, it examines the importance of logistics in global trade, highlighting the need for integrated logistics programs, effective distribution roles, and real-time communication for multinational companies to achieve their goals.

International and Global
Business

Contents
QUESTION 1...................................................................................................................................3
QUESTION 2...................................................................................................................................4
QUESTION 3...................................................................................................................................5
QUESTION 4...................................................................................................................................6
QUESTION 5...................................................................................................................................7
REFERENCES................................................................................................................................9

QUESTION 1
The effect of FDI on economic development, nation's economy and foreign trade has been
significant. The cost and advantages from FDI are different for both host and home country
which most importantly help to increase the net profit and majorly contribute in economic
development (Wirtz, Tuzovic and Ehret, 2015). These cost and benefits for both countries are
discussed specifically:
Benefits & costs to home country
Cost
 Balance of payment: Original outflow of resources (but sometimes in the future global
receivables stream). If FDI is to represent the domestic economy, the account balance
suffers through lower labour costs area and current account continues to suffer if FDI
replaces direct account exporting.
 Employment effects: FDI an additional for national production due to which the local
goods are kept aside and customer are more attracted towards imported goods due to
quality and cheap prices.
Benefits
 FDI can import from their home countries consumer products or ingredients for
production, creating employment that help home country population to be employed on
various projects according to their skills and capabilities. This help to generate more
income within country and people can make sufficient spending to maintain a good flow
of cash inflows and outflows within economy.
 MNEs can gain skills from any outside experience which directly help to increase the
productivity of local products and with best quality. This enables customer to have an
alternative product available in the market in the case of imported product are not
available.
Benefits & costs to host country
Cost:
 Adverse Effect on Competition: Good results of the FDI, often beginning to have
certain worries regarding foreign investor acquiring or becoming too big may have a
serious impact on the market. The foreign company or even the MNE can ultimately are

becoming the monopoly in the economies of the property owner country industries.
These issues arise in nations that have limited numbers of large business working locally.
 Adverse Effect on Balance of Payments: Possibly negatively influenced the BOP of the
host nation business for the principles that is the income and capital produced by the FDI
do not for always remain in the record of the developer government. The MNE that spent
on landlord government would finally take their resources and buy their host country.
Benefits
 Effects on Resource: FDI plays an essential part in international business and
entrepreneurship and quickly provide an organization of home country with different
industry conditions and customers, affordable production plants, latest product
application opportunities, quicker funding and expertise.
 Effect on Capital: Mostly with aid of free movement of capital across the world, the
corporate leaders have much less chance. When the financial and stock markets are
globally, this circumstance would improve the efficiency of wealth and asset governance
and administration.
QUESTION 2
A localization approach focuses on growing the company's competitiveness by ensuring sure that
the products and facilities are personalized to match the needs and desires of a country or
region’s specific markets. This approach fits well in various environments where there are
variations in what consumers want. When a business may recognize special characteristics of a
good or service that will make it appropriate for a region, therefore the development of a division
to offer a tailor-made commodity is worth exploring. Goods like this can achieve success, even if
the solutions are better value for money. Nutrition is one of the aspects that shift across society.
Global food production businesses need to conform to the local preferences (Tallman, Luo and
Buckley, 2018).
A regional implementation policy aims to improve competitiveness by implementing a
regional low-cost approach. This involves harvesting the efficiency gains that arrive from scale
economies, quality development and financial systems of location. These find the current global
movement for a better market climate and the demand for reasonably priced abilities; stronger
global competition is attempting to push organizations to seek cheaper locations. Localization
policy is now the growth strategies in international corporations. thus it is stated that this strategy

mainly focuses on growing profit margin by customizing the company's goods or services in
order to offer a best match for various national location' customer tastes and likeliness.
Companies often implement these manners to modify themselves so that they can cope
with local markets. Many companies implement efficient and globalization policy, like KFC,
Coca Cola, MTV, Motorola, P&G, etc. Several businesses have produced generic goods and
communications which have insulted citizens in foreign markets. A global method is helpful
when there are limited differences among the nations and global competition and in certain
elements; the strategy for international cooperation makes complete sense. First, to reduce costs
in item research, product development, item promotion and distribution, companies could
incorporate economical scale. Secondly, it also helps to have effective control over global brand
management; enforce an international global branding that not only reduces marketing
difficulties but also concentrates marketing resources. Third, the successful pricing strategy is
creating a single national product identity, improving the credibility of companies and allowing
customers to recognise goods.
These would be the benefits of the method for global standardisation. By taking complete advant
age of the international standardization method, McDonalds' becomes one of the world's most
celebrated fast food restaurants.
QUESTION 3
Business ethics significantly influence the business future because it directly impacts not just
the way businesses work from week to week, but also the financial reporting legislation. They
conceptualize plant management viewpoints on corporate social responsibility ( CSR) execution
in terms of competitive balance of ethical concerns against expense and time delivery
competitive pressure (Lasserre, 2017). Factory workers presented CSR in terms of enforcement,
instead of moving beyond and above legal standards; to see it as a commercial strategic necessity
rather than a tool for growth. Thus there are certain ways companies used to manage the risky
supplier with clothing industry such as:
 Certification: This includes paying a foreign entity to inspect the plant and decide that it
follows the quality control and protection requirements defined by the worker. However,
the suppliers can briefly change conditions for passing the certification and then return to
hazardous procedures because after investigators withdraw.

 Audit: That is a more comprehensive third party audit, usually performed quarterly. In
addition, these audits should not be treated lightly as companies can get more
reliability in case if they are planning to spend more money to buy goods from supplier.
Therefore, it is suggested that if business perform audit in every two years then the level
of comfort is negligible.
 Contract: A third instrument is the contract terms here between labelled supplier and
buyer. Businesses must be cautious not to start negotiating too difficult on market value,
which would drive the owners of factories to put individuals at greater risk for profit. If
company squeeze the service provider too close they have really no time to make any
mistakes, they will be compassionate, so that they will do more research.
 Incentives: In recent time companies have developed a very new method of engaging
supplier for a longer period, such as they use to provide effective and sufficient incentive
or rewards with higher prices than the market value. For example, The award for
improved financial results at Li & Fung, a distribution firm supplying leading companies
and retailers 'better suppliers' earn a payment 15 to thirty days sooner than others.
QUESTION 4
The reasoning about exchange rate profession, supposition as well as the absence of links
among consistency and currency markets are the reason for the particular instance for fixed
exchange rates. With regard to monetary stability, it is important to preserve equilibrium in the
fixed currency that policymakers do not increase their supplies with inflationary rates (Doh,
Luthans and Slocum, 2016). With regard to speculation, the uncertainty option is prevented by a
fixed exchange rate system. In spite of ambiguity, a foreign exchange market provides the same
degree of confidence by lowering the exchange-rate instability. Major premise within the near
partnership is between the economy as well as the balance of trade in effects of options to the
exchange equilibrium. There are two essential aspects of the floating currency case: monetary
and fiscal policy flexibility and automatic correction of the balance of trade. For the earlier, a
floating exchange-rate system offers flexibility for fiscal policy nations. The freedom of a nation
to extend or contract the money it sees fit is constrained, according to a fixed rate structure, by
the need to preserve the equilibrium of exchange rates. With regard to the future, if a country
develops a long lasting shortfall in its balance of trade underneath the Bretton woods agreement,
it cannot be rectified by international policy.

The IMF deals with a depreciation of the pound. Members of this method contend even
under a single currency regime the transition process operates more efficiently. They claim that
the disparity here between foreign currency exchange market forces will contribute to a
weakening of its inflation rate if one nation runs a trade imbalance. It is a subjective issue on
what platform for an international enterprise is stronger. However, designers understand that the
Bretton Woods process will function in line with a system of fixed exchange rates. However,
another form of fixed exchange mechanism could be more durable and will foster sustainability
that can enable faster foreign business and financial development. Currency depreciation would
address the commercial imbalance by making exports more competitive and imports more costly
for the economy.
From such an international business point of view, it is most desirable to have a float rate
mechanism that is more likely to manage the exchange rate among market forces that decreases
the risk of interfering in the case of international financial development and exchange. By
comparison, a fixed system affects international trade through currency depreciation risks that
create uncertainty that can negatively affect revenue, income and sustainability.
QUESTION 5
Logistics is the overarching mechanism for organizing the goods from the source to the
intended target as per the customer's or company's requirements. Global trade shipping is an
assimilation of materials such as sales forecasts, manufacturing planning, material managing,
production scheduling, stock and products legislation, shipping legal requirements, commodity
distribution, storage and protection (Derudder and Witlox, 2016). This needs effective integrated
logistics programs to keep this competitive in foreign competition in the market. For
multinational companies, effective distribution roles can support efficiency by understanding
what they are preparing at certain times. The stronger their logistic team members are indeed the
stronger their company will perform better in international business and have a great chance to
accomplish the desired goals. Good and effective logistics roles help major multinational
companies anticipate growing segments of their market might need to be reduced in size
underlined or removed everything together. Properly designed processes and very well-trained
logistical staff help big companies determine which expenditure is worth the cost and which
alternatives are open depending on total profits. Logistics drives businesses and brings reality
into another game in order to minimize overuse as well as unnecessary risk.

The logistics approach will be structured to maintain a seamless link with vendors,
companies and producers based at different locations around the world. For this purpose,
company need the techniques to deliver users in regular, real-time communication with the entire
world. No matter what they are, they require contact networks from which user can communicate
from all the stakeholders in their supply chain. They will take extra precautions to
allowing business to achieve full potential in such a shorter period of time if manager can obtain
the information in real time. Companies can now effectively check vehicle position from their
corporate headquarters with both the mobile autonomous vehicles; technology is used for motion
making plans, documentation, delivery details and results revealed. For instance, future storage
facilities are attempted using software algorithms (Cascio and Boudreau, 2016). This software is
and even more so used in order collecting and storing items and ensures efficiency and
appropriate guidance. With compact Headset and Microphone systems, workers can get
commands from this speech device and can control orally. Logistics costs were a significant
thing for the agriculture sector as industrial operations and distribution practices were slipped
away. The distribution network and distribution activity, which are integral aspects of this
process, have been almost as integral in this sense as the volume and efficiency of the products.

REFERENCES
Books and Journals
Cascio, W. F. and Boudreau, J. W., 2016. The search for global competence: From international
HR to talent management. Journal of World Business, 51(1), pp.103-114.
Derudder, B. and Witlox, F., 2016. International business travel in the global economy.
Routledge.
Doh, J. P., Luthans, F. and Slocum, J., 2016. The world of global business 1965–2015:
Perspectives on the 50th anniversary issue of the Journal of World Business: Introduction
to the special issue.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Tallman, S., Luo, Y. and Buckley, P. J., 2018. Business models in global competition. Global
Strategy Journal, 8(4), pp.517-535.
Wirtz, J., Tuzovic, S. and Ehret, M., 2015. Global business services. Journal of Service
Management, 26(4), pp.565-587.