International Business: WTO Report on Functions and Challenges

This report provides a comprehensive analysis of the World Trade Organization (WTO) in the context of international business. It begins with an introduction to international business and the role of the WTO, followed by a literature review exploring the motivations behind the WTO's formation, including the facilitation of international trade and the resolution of trade disputes. The report then delves into the key functions of the WTO, such as administering trade agreements, providing technical support to developing countries, and fostering cooperation with other international organizations. Furthermore, it assesses the suitability of the WTO, highlighting its benefits in reducing living costs and promoting economic growth, while also addressing the challenges it faces, such as favoring developed countries and slow decision-making processes. The report concludes with an examination of how WTO policies affect organizations and industries globally, providing examples of companies impacted by WTO regulations. The analysis and discussions section further elaborates on the motivations behind WTO formation, key functions, and the challenges faced by the organization.

International Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Literature Review........................................................................................................................1
Analysis and discussions.............................................................................................................4
CONCLUSION................................................................................................................................8
References:.......................................................................................................................................9

INTRODUCTION
International business depict the sale of products and services, technology and knowledge
across the national borders. It undertake the cross border transactions of products among two or
more countries with the purpose of international production of physical products like banking,
finance, insurance and so on. International business leads to create opportunities for the
international business and also referred as globalisation as it takes place in market in which trade
barriers are fall and the preferences of buyers gets change (Cavusgil and et. al., 2020).
International business leads to serve effectively for both personally and professionally in terms
of moving beyond the industrial production. International business occur in various ways like the
movement of products from one to another country, contractual agreements that permit foreign
company to opt products and processes from other nations and formation of research and
development, sales, manufacturing and other facilities in foreign markets (Iammarino, McCann
and Ortega-Argilés, 2018).
To carry forward this report, World Trade Organisation is considered which is an
intergovernmental company as it is related with effective regulation of international trade among
nations. WTO is founded in January 1995 with the objective of eliminating tariffs and other
barriers of trade. The report tends to cover details regarding the understanding about the
motivation behind the formation and functions of company. It also assess the suitability of WTO
and its challenges and also apply suitable theories to practice that impact the policies of
company.
MAIN BODY
Literature Review
Motivations behind the formation of WTO
According to Amadeo, K., (2021), World trade organisation is the global membership
group that leads to promote and manage free trade in various ways like receiving most favoured
nation trading status and existing multinational trade agreements. For this, the overall purpose of
company is to effectively settle the trade disputes when conflict occur and also tends to export
goods at the lower price. Furthermore, World trade organisation also tends to manage ongoing
bargaining for the new trade agreements by focusing on the expansion of growth for developing
countries. WTO is developed of 164 member countries in order to deal with the suitable rules of
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trade nations and the objective of company is to make sure that trade flows effectively and
predictably as possible. WTO is began after the world war II with trade negotiations by focusing
over the elimination of tariffs and non-tariff measures. For this, company also tends to make
suitable agreement in order to promote trade within the telecommunication services among 69
countries (Peterson, Arregle and Martin, 2020). They also tends to eliminate tariffs on the
information technology and concerning products among the 40 members. It also tends to enhance
suitable trade for the insurance, banking, financial information and securities among 70 nations.
For this, the objective of WTO is to make sure suitable and smooth trade flow among various
countries as much as possible. Apart from this, WTO was born out of the General Agreement on
Tariffs and Trade which was founded in 1947 as if trade regarding conflicts occur than WTO
tends to work to resolve it. Along with this, WTO also tends to offer a common platform in terms
of eliminating trade agreements within their member nations in terms of eliminating any sort of
trade disputes. It also undertake observer states which is not signatories to the agreements of
WTO as they do not participate in free trade.
Key functions of WTO
According to Paine, J., (2018), WTO leads to negotiate and also tends to signed by the
bulk of the world's trading nations by undertaking the goal which is useful for the producers of
products and services, importers and exporters and so on in terms of conducting their business.
In regard of this, WTO tends to facilitate the effective execution of administration and operations
of the WTO trade agreements like multinational trade agreements. They also tends to offer forum
regarding the elimination among its members undertaking the multilateral trade relations and
also monitor national trade policies. WTO also offer training and technical help to their members
of developing countries. When the agreements are negotiated then the job of WTO is to make
sure that the signatory country adhere to its commitments in practice and also tends to produce
research that put major impact over the agreement on the economies of nations. Furthermore,
WTO also act as the settlement body of disputes when the trade conflict occur among its member
states (van Tulder, Verbeke and Piscitello, 2019). WTO also file complaint against other member
states when they get to know that the trade economic policies of country are quite divergent from
their commitments under the agreements of WTO. Company also run special program in terms
of supporting developing countries that help them by making them capable to participate in free
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trade with the developed nations as it tends to provide concessions under various agreements to
low development countries in order to ease them into free trade with other countries.
Suitability and challenges faced by WTO
According to the Parizek, M., (2019), WTO has various points of suitability concepts
which benefits and are advantageous for the businesses to operate globally and to develop the
countries as well. It provides suitability in various ways such as it reduces the cost of living and
raising the standard of living to the citizens living in the country, it settles the conflicts among
organizations and countries due to the trade practices and decreases trade tensions as well, it
speeds up the growth of economy and rate of growth in employment, it cuts down the cost of
running the business globally either it can be the initial cost or cost of operations or productions,
it promotes better quality of governance in which the governing body supports the companies in
formulation, importing and exporting goods and services with low and efficient legal formalities
and it assist the countries to develop as a whole.
According to the Simo, R.Y., (2020), WTO has various points of challenge concepts
which spoils and are disadvantageous for the businesses to operate globally and to develop the
countries as well. It faces challenges in various ways such as it has proven that they are
benefiting more to the developed countries which is not that much needed for them but benefits
for the developing countries is required more but they are less supportive in terms of developing
countries, they are generally ignoring the factors which are related to the people such as cultural
and social factors for the citizens of the countries, they practice and perform their functions as
non democratically towards the developing countries, they are progressing slow because of delay
in decision making of agreements and negotiations, they disappoints to reduce tariffs on
agriculture raw materials or products and moreover they ignores environmental conditions for it's
safety as well.
How organisations or industries are affected by WTO policies
According to the Peritz, L. and Agon, S.S., (2020 and 2019), WTO operates
internationally and thereby it has a great affect on the companies who are working and operating
globally on a large basis. WTO has formulated policies and regulations that highly affects the
working of the international firms, impact can be positive as well as negative also. Policies are as
per the various industries which are operating either within the country or externally. Industries
as such retail sector, food and beverage sector, agricultural, plantations and rural sectors,
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production sector, chemical industries, commerce,construction and education sectors, financial
and professional services sectors, forestry, wood, pulp and paper industries, health, hotel, tourism
and catering sectors, mining, coal, mechanical and electrical engineering industries, media,
culture, graphical, oil and gas productions, postal and telecommunication services, public,
shipping, ports, fisheries and waterways sectors, textiles, clothing, leather and footwear
industries, transport manufacturing and services sectors and utilities such as water, gas and
electricity services. All such sectors and industries are in the control of world trade organization
if they want their company to operate globally and can maintain trade practices fair either import
or export functions. There are various suitabilities and challenges of world trade organization
which directly or indirectly affects the several industries and sectors, suitabilities helps the
companies to grow and develop and challenges resist or hampers the growth and development of
the firms, therefore, WTO's policies is not only affecting the companies in favour of growth but
also they are impacting the organizations against the development as well. Some examples of
companies which got affected are Marks and Spencer, Bakkavor, Tesco, Tesla, Unilever,
AstraZeneca, HSBC, Diageo and many more in terms of constructive as well as destructive
manner also, some companies copes up the vulnerable situation while some faces huge losses out
of it.
Analysis and discussions
Analysis of motivations behind the formation of WTO
To facilitate the businesses to operate in struggling and complex environment internationally
Initially there was an issue for the businesses that how they can operate their companies
in different counties without any complications. This requirement has motivated to form the
world trade organization which supports the firm to operate internationally in different countries
without any complexity by forming the trade policies and regulations across the world (Ciuriak,
2019).
To resolve disputes of trade around the world
Initially, the businesses who were operating globally was facing the disputes in settling
the trade fights in every country. This requirement has motivated to form the world trade
organization which supports the firm to operate peacefully without any disputes and moreover, it
help in settlement of the fights among various countries in terms of trade.
To help smallest and the vulnerable countries globally
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Initially, small and under developed counties were facing difficulties in importing and
exporting of their goods or services due to high maintenance cost and charges of it. This
requirement has motivated to form the world trade organization which supports the countries in
easy going of trade with large and developed counties in low cost and maintenance (Hartland-
Thunberg, 2019).
Examining the key functions of WTO
Administering trade agreements, negotiations, disputes and policies
They are the most primary functions of WTO which states that an organization is
responsible for different types of trade agreements, various trade negotiations, handling contrary
disputes among the import export countries and managing and forming the several policies for
the benefits of the counties trade function (Lester, Mercurio and Davies, 2018).
Technical support and training for developing countries
These functions are the essential part in contribution in the development of the countries
because WTO is accountable for providing technical support to each and every organization who
wants to operate globally and helps in training for the same especially for the developing
counties.
Cooperation with other organizations globally
This function is necessary because WTO is answerable if any conflicts arises between
different organizations of different countries. Therefore, WTO functions to solve those conflicts
to maintain harmony within the country or even outside of the country as well and hence they
maintain cooperation and coordination among global organizations (Smith, 2019).
Determining the suitability and challenges faced by WTO
Suitability
It cuts living cost and raise living standards
WTO facilitates the reduction in cost of living for the people in terms of food, clothing
and other services which are generally required by a person and moreover it leads to rise in
income for the people. That is why it is considered as the suitability for the people living
globally across the world.
It settles disputes and decrease trade tensions
WTO facilitates the in resolving any disputes or fights with relation to the trades and
helps the businesses in reducing the trade tensions so that they can successfully run their
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business informationally without any difficulty or problem which can arise due to trade policies
while importing and exporting goods or services.
It accelerates economic growth and employment
WTO facilitates each and every country who is practising international trade for their
business with better economic growth in terms of gross domestic product, increment in the rate
of employment, increasing disposable and national income of the country and many more
benefits which accelerates the economic growth and development of employment as well
(Parizek, 2019).
It reduces the cost of running the business globally
WTO facilitates the businesses who are running globally in cutting their cost of initiation
and operating cost as well. This is because trade permits division of labours among various
countries, reduction in tariffs and many more allowances and benefits is provided to the
international business in running their business around the world successfully.
It encourages better governance
WTO facilitates the people who are globally settled in terms of better governance by
making the governments armed against pressure, committed rules are being made in favour of
the people and many more ways where WTO encourages the government in governing different
policies and procedures which are in favour or in against the people.
It helps the countries to develop
WTO facilitates to develop the countries in terms of economy, political, technical, legal
and socially. Because trade policies and regulations that are framed by an organization are for the
benefit for the people and business as well and thereby, if people and business are benefited then
automatically the country will develop in it's external factors.
Challenges
It benefits developed countries more than developing counties
WTO is facing the challenges in development of the counties because they have more
resources and initiation for the already developed countries but having less scope for the
developing countries so therefore, here WTO is lacking in forming and growing the country
which actually requires the development in terms of economy and business relations as well.
It ignores cultural and social factors
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WTO is facing the challenges in factors like cultural and social causes because WTO is
specifically and essentially for the enhancement of the international business trade of import and
export so thereby, it can be difficult for the WTO to manage the cultural and social factors of any
country to improve or develop the same.
It is under democratic
WTO is facing facing the challenge of criticism of being practising under democracy.
This is because under the WTO regulations and management of organizations, they usually
favour developed countries more than the developing countries so they are not playing fair in
terms of international trade so thereby facing criticism in such matters (Simo, 2020).
It is slow in progress
WTO is facing the challenge of being slow in progressing. The reason behind is the slow
process of negotiations and agreements of trade of import and export across the world.
Therefore, they are not able to focus on some growth and development of themselves in order to
provide better facilitation to the citizens of the country.
It fails to decrease tariffs on agriculture
WTO is facing challenge in terms of reduction of tariffs on agricultural products. Which
means there is no reduction of taxes which is faced by farmers in supplying agricultural products
across the counties and they are facing the huge cost in supplying the basic products around the
world especially in the developing counties.
It ignores environmental conditions
WTO is facing challenge in terms of environmental conditions. This is because while
performing their functions and performing trade practices, they are least concerned about the
environmental factors and ignores the environmental safety and it get harmed. It is important for
them to fight against this challenge so that environmental conditions could go better.
Justifying how organisations or industries are affected by WTO policies
Marks & Spencer – Retail Industry
M&S is an international leading firm in retail sector which functions and operates
globally in the market place across the world in different countries. WTO trade policies has
affected the firm positively and negatively as well. Positive impact on the organization is that the
WTO has sorted out the trade disputes for better revenue and moreover WTO has provided the
international labour to an organization thereby reducing the cost of operation. Negative impact
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on the company is the ignorance of cultural and social factors and thereby facing the slow
progress for the firm as well in the retail sector (Peritz, 2020).
Bakkavor – Food Industry
Bakkavor is an international leading firm in food industry which functions and operates
globally in the market place across the world in different countries. WTO trade policies has
affected the company positively and negatively as well. Positive impact on the organization is
that the WTO has facilitated with the cutting cost in operating the business globally with better
governance and development of an industry. Negative impact on the organization is that the
increased tariffs on the agricultural products has resulted in the increment of the cost of raw
materials for production and thereby, it has led to the increasing of prices as well (Agon, 2019).
CONCLUSION
Therefore, from the preceding discussion it is being analysed that international business
undertake the prominent commercial activities that occur in order to promote and transfer the
suitable goods and services, ideas, people, technologies and so on across the national boundaries
(Hamilton and Webster, 2018). Moreover, it include the proper understanding regarding the
impact of suitable activities on the foreign market, government, companies, countries and so on.
For this, the prosper international business leads to recognise the diversity of global market area
as it is able to cope up with the risk factor at the time of performing business activities in the
dynamic market (Buckley and Casson, 2019).
For this, it is recommended to company that they need to properly clarify the policies and
other factors who tends to drive at the global level. Respective company also need to understand
the preferences and condition of local market by developing collaborative approach. Along with
this, company also need to socialise the global marketing plan effectively and develop it by
considering feedback of their potential customers. Furthermore, company also need to ensure the
suitable track and adjust it for their real time by effectively communicating and sharing suitable
vision for success and growth.
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References:
Books and Journals
Agon, S.S., 2019. International Adjudication on Trial: The Effectiveness of the WTO Dispute
Settlement System. Oxford University Press.
Buckley, P. and Casson, M., 2019. Decision-making in international business. Journal of
International Business Studies. 50(8). pp.1424-1439.
Cavusgil, S.T and et. al., 2020. Risk in international business and its mitigation. Journal of
World Business, 55(2), p.101078.
Ciuriak, D., 2019. World Trade Organization 2.0: Reforming Multilateral Trade Rules for the
Digital Age. CIGI Policy Brief, (152).
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hartland-Thunberg, P., 2019. Trading blocs, US exports, and world trade. Routledge.
Iammarino, S., McCann, P. and Ortega-Argilés, R., 2018. International business, cities and
competitiveness: recent trends and future challenges. Competitiveness Review: An
International Business Journal.
Lester, S., Mercurio, B. and Davies, A., 2018. World trade law: text, materials and commentary.
Bloomsbury Publishing.
Paine, J., 2018, July. The Functions of the WTO's Dispute Settlement Body: A Distinctive Voice
Mechanism. In Society of International Economic Law (SIEL), Sixth Biennial Global
Conference.
Parizek, M., 2019. Negotiations in the World Trade Organization: Design and Performance.
Routledge.
Peritz, L., 2020. When are International Institutions Effective? The Impact of Domestic Veto
Players on Compliance with WTO Rulings. International Studies Quarterly. 64(1).
pp.220-234.
Peterson, M.F., Arregle, J.L. and Martin, X., 2020. Multilevel models in international business
research. In Research Methods in International Business (pp. 417-432). Palgrave
Macmillan, Cham.
Simo, R.Y., 2020. Trade in Services in the African Continental Free Trade Area: Prospects,
Challenges and WTO Compatibility. Journal of International Economic Law. 23(1).
pp.65-95.
Smith, A.K., 2019. Creating a World Economy: Merchant Capital, Colonialism, and World
Trade, 1400-1825. Routledge.
van Tulder, R., Verbeke, A. and Piscitello, L. eds., 2019. International business in the
information and digital age. Emerald Publishing Limited.
Online
The World Trade Organization and How It Works. 2021. [Online] Available through:
<https://www.thebalance.com/what-is-the-world-trade-organization-wto-3306366>./
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