Introduction
Attending the course of Introduction to International Market, I believe that it helped me to improve my understanding and thoughts about the international business and its nature. My knowledge has significantly been increased about globalization with the help of this course. In reviewing my course, learning, readings and tutorial questions, I have found that Globalization around the world remained the major issue throughout the course to understand its role and impact on the international business. Although, the course discussed globalization in different perspectives such as its impacts, consequences, debates, etc, however, the issue of key drivers of globalization and impacts of these drivers on the international business in terms of its nature is selected because the main purpose of the course is to introduce the international business even I have found that the international market and economy has completely changed due to the impacts of globalization. Therefore, how the international business is developed and changed is important to highlight in the light of globalization and its key drivers.
Key Drivers of Globalization
I updated my knowledge and understanding in different areas such as trade and trade barriers, technological advancement, international institutions, global economy, outsourcing and offshoring, etc. However, I have found during the classes that Globalization has been increased and paced up since after the World War II. Before the period of 1970, some major powers like U.S. and Japan were dominating the international markets; however, the reduction and elimination of trade barriers resulted in changing the global economic structure and therefore, the international business (Hill, Cronk & Wickamasekera, 2014).
I have found many drivers and factors of globalization since 1970 within the major drivers highlighted in the course such as reduction in trade barriers and technological advancement. The first important factor is the trade and trade barriers that were reduced to develop the global economy integrated. The trade (import and export) with the continuous elimination of barriers and tariffs allowed countries to begin international business effectively. One of the major learning points during the class of globalization drivers I have found is that the countries trade with each other to improve their markets in terms of offering their products to get the products and services of other countries (Hill, Cronk & Wickamasekera, 2014).
Another driver that allowed the rapid globalization is the technological development, advancements, and innovations. For me, technology is the major driver of rapid globalization. The impacts and effects of technology on the global economy are obvious and apparent (Ethier, 2005). From telecommunication to transport to the internet, the rapid changes and developments have paced up the process of global trade and business. In 1960, the U.S. was the major and dominating economy; however, with the globalization process around 25 nations were emerged economically.
It was not possible for the businesses and firms to migrate and trade their products and services across the countries and nations without the transportation system such as ships, airplanes, air jets and trains, etc. These global economic drivers since 1970 resulted in a large number of international firms and overseas business. In 1996, there were 44, 000 firms and 280,000 overseas businesses. It shows that how technology, transportation, and reduction in trade barriers motivate MNCs to move and enter the global market (Shangquan, 2000).
I learned from the course of international business that technology, mainly the Internet and telecommunication had changed the global business structure, and the independent economies became interdependent, integrated and single economic system. Beyond this simple and most apparent discussion of the globalization drivers, there are some critical aspects and factors that promote fast global process in the light of globalization and trade theories. The needs to get products of other countries, to reduce the impacts of product life cycle, the advantage of producing innovative products, specialization in the products, competitive advantage, the cost of production and transportation and fast growth are some of the critical factors found in the course. The analysis of more than 100 countries during 1970 to 1990 has revealed that the open and free trade economies have more potential advantages to grow faster (Hill, Cronk & Wickamasekera, 2014). It means that the globalization factors have resulted in the fastest economic growth of the nations in the integrated system (Baier & Bergstrand, 2007; Parker, 1998).
Impacts on the Nature of International Business
The drivers of globalization have formed the new global economy that is more integrated and interdependent and therefore, in response to the changes in the global economy, the nature of international business has been changed. The nature and rules of games have changed both positively and negatively in different aspects due to the opportunities and threats presented by globalization in the global economy. What I understood from the course is that the global market due to the pressures and forces of globalization and the global economy has become more competitive. Here, the role of technological advancement and telecommunication is apparent in growing competition in the international business place. The rapid globalization has raised many concerns and worries in the global market.
For me, the effectiveness of the companies, their management, decision making and qualities of individual managers can control the concerns and risks of globalization. The managements and managers are available with many opportunities and benefits in the context of globalization such as global mindsets, knowledge of international consumers, free approach to the larger market and technological benefits. The multinational companies and firms are required to make the fastest decisions to overcome the competitive forces and pressures in the global market and to achieve global success. Although, globalization positively influenced international business, however, some major drawbacks include financial crisis, global economy decline, and an increase in poverty. For example, the financial crisis in 1997 badly impacted the global economy and therefore, the international business (Hill, Cronk & Wickamasekera, 2014). One of the major drawbacks of the global economy on the international business is that the individual external factors impact the business of each economy involved in the global market. The oil price fluctuations in 1983 resulted in decline in the share of traders in the global trade as can be found in the graph below:
(World Trade Report, 2008)
I have also learned that although, growth and trade are interlinked with each other. However, the restrictions and policies are very important for the balance of trade and benefits of trade to both economies involved in free trade. The protection of domestic firms and industries and production is very important in the rapidly growing global business market. Here, the example of Brazil-China free trade relation can be discussed, where; China received more benefits due to the ability to produce manufacturing and technology products as compared to the limited export of primary products from Brazil (Barbosa & Mendes, 2006; Hill & Jain, 2000).
Another aspect of nature of international business is that the product development becomes more challenging in the global business as compared to the domestic market due to the high competition and short product life cycle. I was not aware of this competitive issue before attending the course. This is what I have learned and understand the course material, readings and textbook about the issue of international business structure in the context of the globalization process and pace.
Conclusion
This is how my thoughts and reflections have expanded and changed about the international business in the context of globalization. However, there is still a room for more learning and improvements in my thoughts and perceptions about the global economy and global business market. Though I learned that international business is different from the domestic market, but I want more knowledge and information about how to exactly differentiate local market from international market as the competition, government policies and external pressures are some critical factors in both international and domestic businesses. Therefore, it is important to understand that how these factors have actually formulated the structure of the international business and how multinational companies and businesses grow and survive in the global markets.
Bibliography
Baier, S. L., & Bergstrand, J. H. (2007). Do free trade agreements actually increase members' international trade?. Journal of International Economics, Vol. 71, No. 1, pp. 72-95.
Barbosa, A. D. F., & Mendes, R. C. (2006). Economic Relations between Brazil and China: a difficult partnership. Dialogue on Globalization. Friedrich Ebert Stiftung (FES) Briefing Papers.
Ethier, W. J. (2005). Globalization, globalisation: trade, technology, and wages. International Review of Economics & Finance, Vol. 14, No. 3, pp. 237-258.
Hill, C. W., & Jain, A. K. (2000). International Business 10/e: Competing in the Global Marketplace. McGraw-Hill Education.
Hill, C. W., Cronk, T., & Wickramasekera, R. (2014). Global business today. McGraw-Hill Education (Australia).
Parker, B. (1998). Globalization and business practice: Managing across boundaries. SAGE Publications Ltd.
Shangquan, G. (2000). Economic globalization: trends, risks, and risk prevention. Economic & Social Affairs, CDP Background Paper. 1.
World Trade Report, (2008). Globalization And Trade. Available from https://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e.pdf [Accessed 31 August 2016]
