The term international business refers to all commercial transactions (private and government; sales, investments, logistics and transportation) that are carried out between two or more people, regions, cities and/or nations within political boundaries. Usually private companies undertake such profitable transactions; the government undertakes them for profit or politics.[1] It refers to all businesses with activities that involve cross-border transactions for goods, services between two or more nations, transactions for economic resources, including capital, skills, people, etc., for international production of physical goods and services, as well as for finance, banking, insurance, construction and others.[2].
A multinational company is a company that has a global focus on markets and production with one or more country operations. It is often called a multinational corporation or transnational company. The best-known multinationals are fast food companies such as McDonald's and Yum! Brands (owners of Taco Bell, KFC, and Pizza Hut),[3] vehicle manufacturers such as General Motors, Ford Motor Company, and Toyota, consumer electronics companies such as Samsung, LG, and Sony, and energy companies such as ExxonMobil, Shell, and BP. Most of the largest corporations operate in various national and international markets.
The field of International Business encompasses a wide variety of aspects related to economic and cultural interaction between countries. It includes the study of legal and political frameworks, economic policies, labor practices, environmental regulations, market strategies, international finance, intercultural communication and global operations management. These elements allow us to understand how companies adjust to diverse contexts and how differences between nations influence their commercial decisions.[4].
Background
One of the first scholars to participate in the development of a theory of multinational corporations was Stephen Hymer. Throughout his academic life, he developed theories that sought to explain foreign direct investment (FDI) and why companies become neighborhood stores.
There are three phases to Hymer's work. The first phase was his dissertation in 1960 called International Operations of National Companies. In this thesis, Hymer starts from neoclassical theory and opens a new area of international production. At first, Hymer began to analyze neoclassical theory and financial investment in which the main reason for the movement of capital is the difference in interest rates. Then he began to analyze the characteristics of foreign investment by large companies for direct production and business, calling this foreign direct investment. When analyzing the two types of investments, Hymer distinguished financial investment from direct investment. The main distinguishing feature was control. Where portfolio investment is a more passive approach, and the primary objective is financial gain, with foreign direct investment a company has control over foreign operations. So, the traditional investment theory based on differential interest rates does not explain the motivations for FDI.
International business expansion
Introduction
The term international business refers to all commercial transactions (private and government; sales, investments, logistics and transportation) that are carried out between two or more people, regions, cities and/or nations within political boundaries. Usually private companies undertake such profitable transactions; the government undertakes them for profit or politics.[1] It refers to all businesses with activities that involve cross-border transactions for goods, services between two or more nations, transactions for economic resources, including capital, skills, people, etc., for international production of physical goods and services, as well as for finance, banking, insurance, construction and others.[2].
A multinational company is a company that has a global focus on markets and production with one or more country operations. It is often called a multinational corporation or transnational company. The best-known multinationals are fast food companies such as McDonald's and Yum! Brands (owners of Taco Bell, KFC, and Pizza Hut),[3] vehicle manufacturers such as General Motors, Ford Motor Company, and Toyota, consumer electronics companies such as Samsung, LG, and Sony, and energy companies such as ExxonMobil, Shell, and BP. Most of the largest corporations operate in various national and international markets.
The field of International Business encompasses a wide variety of aspects related to economic and cultural interaction between countries. It includes the study of legal and political frameworks, economic policies, labor practices, environmental regulations, market strategies, international finance, intercultural communication and global operations management. These elements allow us to understand how companies adjust to diverse contexts and how differences between nations influence their commercial decisions.[4].
Background
One of the first scholars to participate in the development of a theory of multinational corporations was Stephen Hymer. Throughout his academic life, he developed theories that sought to explain foreign direct investment (FDI) and why companies become neighborhood stores.
According to Hymer, there are two main determinants of FDI in which an imperfect market structure is the key element. The first is company-specific advantages that are developed in the home country of the specific companies and profitably used in the foreign country. The second determinant is the elimination of control in which Hymer wrote: "When companies are interconnected, they compete to sell in the same market or one of the companies can sell to the other", and because of this "it can be profitable to replace centralized decision making with decentralized decision making."
The second phase is his neoclassical article in 1968. This paper includes a theory of internationalization and explains the growth direction of international expansion of companies. At a later stage, Hymer adopted a more Marxist approach in which he explained that multinationals as agents of an international capitalist system cause conflicts and contradictions, causing, among other things, inequalities and poverty in the world. Hymer is the father of MNE theory, explaining the motivations for companies doing direct business abroad.
Modern economic theories of multinationals and foreign direct investment include internalization theory and John Dunning's OLI model. Hymer and Dunning are considered founding fathers of international business as a specialized field of study.
Licensing and franchising are two additional modes of entry that function similarly. Licensing allows a licensor to grant the rights to intangible property to the licensee for a specified period of time in exchange for a royalty. Franchising, on the other hand, is a specialized form of licensing in which the "franchisor" sells the intangible property to the franchisee and also requires the franchisee to operate as dictated by the franchisor.[5].
Finally, a joint venture and a wholly owned subsidiary are two more modes of entry into international business. A joint venture is when a business created is jointly owned by two or more companies (most joint ventures are 50-50 partnerships). This contrasts with a wholly owned subsidiary, when a company owns 100 percent of the shares of a company in a foreign country because it has established a new operation or acquires an established company in that country.
Consolidation as an academic discipline
Starting in the 1970s, the advance of economic interdependence, the creation of multilateral organizations (such as the International Monetary Fund, the World Bank and the World Trade Organization) and the increase in regional integration agreements (such as the European Union or MERCOSUR), promoted the consolidation of International Business studies as an independent career.
In the 1980s and 1990s, the degree was strengthened in Latin America, with the emergence of university programs that incorporated subjects in foreign trade, international finance, global marketing and intercultural negotiation. At this stage, the concept of “International Business” began to differ from that of International Trade, as it covered not only the exchange of goods and services, but also the strategic management of companies in global contexts.
Regional differences.
Future focus.
The future of the career points towards a more digital, sustainable and interdisciplinary training, where the International Business professional must master:
Sources:.
Physical and social factors of competitive business and social environment
Contenido
La realización de las operaciones internacionales depende de los objetivos de las empresas y los medios con los que las realizan. Las operaciones afectan y son afectados por factores físicos, sociales y el entorno competitivo.
Choice of entry mode
Strategic variables affect the choice of entry mode for multinational expansion beyond its domestic markets. These variables are global concentration, global synergies, and global strategic motivations of multinational companies.
business media
International business is carried out through various means, which facilitate the exchange of goods, services and investments between companies and people from different countries. Below are some of the most common business mediums:.
International Trade:
Import: Purchase of goods and services produced in a foreign country for sale in the national market.
Export: Sale of goods and services produced in the country to buyers abroad.
Cross-Border Electronic Commerce: Sale and purchase of goods and services over the Internet, between buyers and sellers from different countries.
Foreign Direct Investment (FDI):.
Investment made by a company in a foreign country to establish a business operation or acquire an existing company.
FDI can take various forms, such as the creation of subsidiaries, the acquisition of companies, participation in joint ventures, etc.
Strategic Alliances:
Collaboration agreements between companies from different countries to share resources, technology or markets.
Strategic alliances can be of various types, such as joint ventures, licensing agreements, research consortia, etc.
Franchises:
Contractual agreements in which one company (franchisor) grants another company (franchisee) the right to use its brand, trade name, know-how and operating methods to establish and operate a business similar to that of the franchisor.
International Subcontracting:
Hiring a foreign company to carry out specific activities or processes related to a company's value chain.
International outsourcing can be a strategy to reduce costs, access specialized labor, or take advantage of the competitive advantages of other countries.
Physical and social factors of companies
Internal company policies are a set of documented guidelines that establish standards in areas such as appropriate procedures and employee behavior. In many cases, internal policies must comply with certain legal requirements, such as those relating to an employee's right to privacy. The types of policies that companies implement vary widely, depending on the nature of the business and management philosophy.
Culture between companies is the repertoire of behaviors, the way of proceeding and acting in a company in accordance with the objectives and goals that it intends to achieve. Culture, as far as behavior is concerned, talks about the characteristics, properties, typology and way of behaving of the different members of the company, culture reflects the image of the organization.
The systems or means of organizational communication are at the service of culture, since it may or may not be explicitly regulated.
Business cycles exist when economic activity accelerates or slows down. More specifically, a business cycle is an oscillation in production, income and employment throughout the country, usually lasting between 2 and 10 years and characterized by a general expansion or contraction of many sectors of the economy. They are produced in all advanced market economies.
Balance
Situation of stability in a process, which occurs when the opposing forces acting in it are compensated and cancelled. The term comes from physics, where it was initially applied to a state of rest in bodies subjected to different forces. In economics it serves to describe a state in which there are no tendencies towards change or, more precisely, where the present tendencies cancel each other out, producing stability.
Within the external framework, we must distinguish between the general environment and the specific environment since they are not completely the same:
General environment: refers to the global framework or set of factors that affect all companies in a given society or geographic area in the same way.
Specific environment: refers only to those factors that influence a specific group of companies, that have common characteristics and that operate in the same sector of activity.
Factors that influenced the growth of globalization in international business
There has been a growth in globalization in recent decades, due to at least the following eight factors:.
Importance of education or teaching of international business
Los gerentes de negocios internacionales deben comprender las disciplinas de las ciencias sociales y la forma en que afectará a todas las áreas de negocio funcionales.
Estudiar negocios internacionales es importante en la economía mundial actual, ya que dota a los profesionales de habilidades y conocimientos que les permiten navegar en un ambiente empresarial globalizado y multicultural, además de brindarles a los especialistas de esta disciplina oportunidades de movilidad internacional, aprendizaje de idiomas y buenas ofertas laborales[8].
Importance of linguistic/cultural studies in international business
A considerable advantage in international business is obtained through the knowledge and use of language. The advantages of being an international businessman who is fluent in the local language are as follows:.
In many cases, it is impossible to gain an understanding of a culture's habits without first taking the time to understand the culture. Some of the benefits of understanding local culture are:
Importance of the study of International Business
International business standards focus on the following:.
By focusing on these, students will gain a better understanding of political economy. These are tools that help future business people close the economic and political gap between countries.
There is an increasing amount of demand for business people with an education in International Business. A survey conducted by Thomas Patrick of the University of Notre Dame found that bachelor's degree holders and master's degree holders found the training they received through education to be very practical in the work environment. Businessmen with an education in international business were also significantly more likely to be sent abroad to work in the company's international operations.
The following table provides an overview of higher education in international business and its benefits.
References
[1] ↑ Daniels, J., Radebaugh, L., Sullivan, D. (2007). International Business: environment and operations, 11th muy hl edition. Prentice Hall. ISBN 0-13-1869jmi o f42-6.
[2] ↑ Joshi, Rakesh Mohan, (2009) International Business, Oxford University Press, ISBN 0-19-568909-7.
[6] ↑ Kim, W. C., & Hwang, P. (1992). Global strategy and multinationals' entry mode choice. Journal of International Business Studies, 23(1), 29. Retrieved from http://search.proquest.com.proxy.davenport.edu/docview/197155299?accountid=40195.: http://search.proquest.com.proxy.davenport.edu/docview/197155299?accountid=40195
There are three phases to Hymer's work. The first phase was his dissertation in 1960 called International Operations of National Companies. In this thesis, Hymer starts from neoclassical theory and opens a new area of international production. At first, Hymer began to analyze neoclassical theory and financial investment in which the main reason for the movement of capital is the difference in interest rates. Then he began to analyze the characteristics of foreign investment by large companies for direct production and business, calling this foreign direct investment. When analyzing the two types of investments, Hymer distinguished financial investment from direct investment. The main distinguishing feature was control. Where portfolio investment is a more passive approach, and the primary objective is financial gain, with foreign direct investment a company has control over foreign operations. So, the traditional investment theory based on differential interest rates does not explain the motivations for FDI.
According to Hymer, there are two main determinants of FDI in which an imperfect market structure is the key element. The first is company-specific advantages that are developed in the home country of the specific companies and profitably used in the foreign country. The second determinant is the elimination of control in which Hymer wrote: "When companies are interconnected, they compete to sell in the same market or one of the companies can sell to the other", and because of this "it can be profitable to replace centralized decision making with decentralized decision making."
The second phase is his neoclassical article in 1968. This paper includes a theory of internationalization and explains the growth direction of international expansion of companies. At a later stage, Hymer adopted a more Marxist approach in which he explained that multinationals as agents of an international capitalist system cause conflicts and contradictions, causing, among other things, inequalities and poverty in the world. Hymer is the father of MNE theory, explaining the motivations for companies doing direct business abroad.
Modern economic theories of multinationals and foreign direct investment include internalization theory and John Dunning's OLI model. Hymer and Dunning are considered founding fathers of international business as a specialized field of study.
Licensing and franchising are two additional modes of entry that function similarly. Licensing allows a licensor to grant the rights to intangible property to the licensee for a specified period of time in exchange for a royalty. Franchising, on the other hand, is a specialized form of licensing in which the "franchisor" sells the intangible property to the franchisee and also requires the franchisee to operate as dictated by the franchisor.[5].
Finally, a joint venture and a wholly owned subsidiary are two more modes of entry into international business. A joint venture is when a business created is jointly owned by two or more companies (most joint ventures are 50-50 partnerships). This contrasts with a wholly owned subsidiary, when a company owns 100 percent of the shares of a company in a foreign country because it has established a new operation or acquires an established company in that country.
Consolidation as an academic discipline
Starting in the 1970s, the advance of economic interdependence, the creation of multilateral organizations (such as the International Monetary Fund, the World Bank and the World Trade Organization) and the increase in regional integration agreements (such as the European Union or MERCOSUR), promoted the consolidation of International Business studies as an independent career.
In the 1980s and 1990s, the degree was strengthened in Latin America, with the emergence of university programs that incorporated subjects in foreign trade, international finance, global marketing and intercultural negotiation. At this stage, the concept of “International Business” began to differ from that of International Trade, as it covered not only the exchange of goods and services, but also the strategic management of companies in global contexts.
Regional differences.
Future focus.
The future of the career points towards a more digital, sustainable and interdisciplinary training, where the International Business professional must master:
Sources:.
Physical and social factors of competitive business and social environment
Contenido
La realización de las operaciones internacionales depende de los objetivos de las empresas y los medios con los que las realizan. Las operaciones afectan y son afectados por factores físicos, sociales y el entorno competitivo.
Choice of entry mode
Strategic variables affect the choice of entry mode for multinational expansion beyond its domestic markets. These variables are global concentration, global synergies, and global strategic motivations of multinational companies.
business media
International business is carried out through various means, which facilitate the exchange of goods, services and investments between companies and people from different countries. Below are some of the most common business mediums:.
International Trade:
Import: Purchase of goods and services produced in a foreign country for sale in the national market.
Export: Sale of goods and services produced in the country to buyers abroad.
Cross-Border Electronic Commerce: Sale and purchase of goods and services over the Internet, between buyers and sellers from different countries.
Foreign Direct Investment (FDI):.
Investment made by a company in a foreign country to establish a business operation or acquire an existing company.
FDI can take various forms, such as the creation of subsidiaries, the acquisition of companies, participation in joint ventures, etc.
Strategic Alliances:
Collaboration agreements between companies from different countries to share resources, technology or markets.
Strategic alliances can be of various types, such as joint ventures, licensing agreements, research consortia, etc.
Franchises:
Contractual agreements in which one company (franchisor) grants another company (franchisee) the right to use its brand, trade name, know-how and operating methods to establish and operate a business similar to that of the franchisor.
International Subcontracting:
Hiring a foreign company to carry out specific activities or processes related to a company's value chain.
International outsourcing can be a strategy to reduce costs, access specialized labor, or take advantage of the competitive advantages of other countries.
Physical and social factors of companies
Internal company policies are a set of documented guidelines that establish standards in areas such as appropriate procedures and employee behavior. In many cases, internal policies must comply with certain legal requirements, such as those relating to an employee's right to privacy. The types of policies that companies implement vary widely, depending on the nature of the business and management philosophy.
Culture between companies is the repertoire of behaviors, the way of proceeding and acting in a company in accordance with the objectives and goals that it intends to achieve. Culture, as far as behavior is concerned, talks about the characteristics, properties, typology and way of behaving of the different members of the company, culture reflects the image of the organization.
The systems or means of organizational communication are at the service of culture, since it may or may not be explicitly regulated.
Business cycles exist when economic activity accelerates or slows down. More specifically, a business cycle is an oscillation in production, income and employment throughout the country, usually lasting between 2 and 10 years and characterized by a general expansion or contraction of many sectors of the economy. They are produced in all advanced market economies.
Balance
Situation of stability in a process, which occurs when the opposing forces acting in it are compensated and cancelled. The term comes from physics, where it was initially applied to a state of rest in bodies subjected to different forces. In economics it serves to describe a state in which there are no tendencies towards change or, more precisely, where the present tendencies cancel each other out, producing stability.
Within the external framework, we must distinguish between the general environment and the specific environment since they are not completely the same:
General environment: refers to the global framework or set of factors that affect all companies in a given society or geographic area in the same way.
Specific environment: refers only to those factors that influence a specific group of companies, that have common characteristics and that operate in the same sector of activity.
Factors that influenced the growth of globalization in international business
There has been a growth in globalization in recent decades, due to at least the following eight factors:.
Importance of education or teaching of international business
Los gerentes de negocios internacionales deben comprender las disciplinas de las ciencias sociales y la forma en que afectará a todas las áreas de negocio funcionales.
Estudiar negocios internacionales es importante en la economía mundial actual, ya que dota a los profesionales de habilidades y conocimientos que les permiten navegar en un ambiente empresarial globalizado y multicultural, además de brindarles a los especialistas de esta disciplina oportunidades de movilidad internacional, aprendizaje de idiomas y buenas ofertas laborales[8].
Importance of linguistic/cultural studies in international business
A considerable advantage in international business is obtained through the knowledge and use of language. The advantages of being an international businessman who is fluent in the local language are as follows:.
In many cases, it is impossible to gain an understanding of a culture's habits without first taking the time to understand the culture. Some of the benefits of understanding local culture are:
Importance of the study of International Business
International business standards focus on the following:.
By focusing on these, students will gain a better understanding of political economy. These are tools that help future business people close the economic and political gap between countries.
There is an increasing amount of demand for business people with an education in International Business. A survey conducted by Thomas Patrick of the University of Notre Dame found that bachelor's degree holders and master's degree holders found the training they received through education to be very practical in the work environment. Businessmen with an education in international business were also significantly more likely to be sent abroad to work in the company's international operations.
The following table provides an overview of higher education in international business and its benefits.
References
[1] ↑ Daniels, J., Radebaugh, L., Sullivan, D. (2007). International Business: environment and operations, 11th muy hl edition. Prentice Hall. ISBN 0-13-1869jmi o f42-6.
[2] ↑ Joshi, Rakesh Mohan, (2009) International Business, Oxford University Press, ISBN 0-19-568909-7.
[6] ↑ Kim, W. C., & Hwang, P. (1992). Global strategy and multinationals' entry mode choice. Journal of International Business Studies, 23(1), 29. Retrieved from http://search.proquest.com.proxy.davenport.edu/docview/197155299?accountid=40195.: http://search.proquest.com.proxy.davenport.edu/docview/197155299?accountid=40195