The field requires knowledge and skills above and beyond normal business expertise
In today’s globalized world, there are very few boundaries to free trade and communication.
With the globalization of the world economy, there is a rise in the number of companies that operate globally. The competition is at its peak, where all companies want to sell their goods to everyone and everywhere.
International business refers to the trade of goods, services, technology, capital, and/or knowledge across national borders and at a global or trans-national level. It involves cross-border transactions of goods and services between two or more countries.
It requires knowledge and skills above and beyond normal business expertise, such as familiarity with the business regulations of the nations in which the organization operates, understanding of local customs and laws, and the capability to conduct transactions that may involve multiple currencies.
Hence, “international business management” is the science and art of getting people together to accomplish desired goals and objectives by coordinating and integrating all available resources efficiently and effectively.
What is globalization?
Although globalization and internationalization are used in the same context, there are some major differences. Globalization is a much larger process, and often includes the assimilation of the markets as a whole. Moreover, when people talk about globalization, they refer to the cultural context as well. Globalization is an intensified process of internationalizing a business.
Globalization means the intensification of cross-country political, cultural, social, economic, and technological interactions that result in the formation of a trans-national business organization. It also refers to the assimilation of economic, political, and social initiatives on a global scale. Globalization also refers to the costless cross-border transition of goods and services, capital, knowledge, and labour.
Why businesses go global
First-mover advantage: It refers to getting into a new market and enjoy the advantages of being first. It is easy to quickly start doing business and get early adopters this way
Opportunity for growth: Potential for growth is a very common reason of internationalization. Your market may saturate in your home country and therefore you may set out on exploring new markets
Small local markets: Start-ups in Nordic countries have always looked at internationalization as a major strategy from the very beginning because their local market is small
Increase of customers: If customers are in short supply, it may hit a company’s potential for growth. In such a case, companies may look for internationalization
Discourage local competitors: Entering a new market may mean discouraging other players from getting into the same business-space
Product flexibility: International businesses having products that don’t really sell well enough in their local or regional market may find a much better customer base in international markets. Hence, a business having global presence need not dump the unsold stock of products at deep discounts in the local market. It can search for some new markets where the products sell at a higher price
Less competition: International markets can have less competition where the businesses can capture market share quickly. This factor is particularly advantageous when high-quality and superior products are available
Learning new methods: Doing business in more than one country offers great insights to learn new ways of accomplishing things. This new knowledge and experience can pave ways to success in other markets as well
Protection from national trends and events: Marketing in several countries reduces the vulnerability to events of one country. For example, the political, social, geographical and religious factors that negatively affect a country may be offset by marketing the same product in a different country.
Operations: All firms that want to go international have the goal to increase their respective economic value when engaging in international trade transactions. To accomplish this goal, each firm must develop its individual strategy and approach to maximize value, lower costs, and increase profits. A firm’s value creation is the difference between V (the value of the product being sold) and C (the cost of production per each product sold)
In conclusion, international businesses are simultaneously facing the best of times and the worst of times, and hence, the knowledge and intelligence among them would succeed in this era. Increasingly, companies employ globally, and a person with knowledge in international business has a significantly higher chance of employment under the international operations of a firm.
Taslim Ahammad is Assistant Professor, Bangabandhu Sheikh Mujibur Rahman Science and Technology University.