1. How does international business affect individual workers?
Consumption and income are the two main channels through which the welfare of an
individual worker, generally as a part of a household, may be affected by international trade.
The overall effect of consumption works via the impact of international business on
household expenditure, as the total cost of consumption is altered through the influence of
trade on the prices of consumer items. Individual workers can benefit from international trade
as it lowers the prices of consumer goods. If consumer prices decline in a way that favors
individual workers, like for example it coincides with changes in relative prices of what they have
in their consumption basket, their gains may be substantial enough to compensate even the
presence of losses in wages and may experience overall welfare gains. Therefore, it is important
to consider the additional impact on their budget when analyzing the impacts of international
trade. Imported products tend to have lower prices than locally produced ones for a variety of
reasons, including lower labor costs and better technology in the exporting country. The
reduced prices may lead to wage losses for individuals who work in the production of a local
version of the imported item. On the other hand, lower prices may be beneficial to others if
cheaper product is in their consumption basket.
The effect of the latter works via the impact on earnings, as international trade may
affect the wage incomes of individuals based on their industry affiliation or skill level.
International trade is known to reduce real wages in certain sectors, leading to a loss of wage
income for a segment of the population. The negative effects of trade on earnings tend to be
concentrated in specific areas and industries. Aggregating across regions and firms gives us a
different picture. As already stated, cheaper imports can reduce the prices of domestic products
which may lead to wage losses of individual workers who work in the production of the
domestic version of the item.
In overall, Globalization impacts the standard of living of different types of workers to
different degrees within countries, in all countries. A fact that focuses on the winning or losing
point of international trade misses the whole point of why it exists.
2. How does the level of technology in a country affect its economic condition?
For some critics, “technology is something to resist”. Ask them for some and they can
give woeful impression as to how technology “robs us of our humanity and is a dangerous
master we must serve.” So many bleak views, but why would societies, especially those
progressive ones, allow such “traumatic abomination” if nothing worthwhile and extraordinary
comes out of it?
People now realize that technological innovation, economic growth, and overall human
wellbeing are intricately linked with each other and that impeding our innovative capacity
means holding up our potential to progress. It is a given fact that disruptions may happen
because of technological changes especially in the adaptation period but, if we do not allow
them today, it may cost us the overall quality of life which may be substantially lower as
compared to what we may achieve. Technology has deeply affected the global economy and its
usage has been linked to improved living standards, marketplace transformation and more
wholesome international trade. Technology has an amazing power of permeate companies.
With technological advancements, operations have significantly improved and the reduction in
the cost of doing business is apparent. For example, an entire manufacturing plant can now
operate with only few technicians controlling iver robotic systems remotely. Furthermore,
advancements in the computer and telecommunications industries have increased job
opportunities globally and strengthened economic growth.
Technology is vital to successful operations of an economy and, of course, to the global
economy as a whole. But, it requires a sophisticated and well calculated way of planning and
execution to manage technological innovations properly.
3. Why is world peace important to international trade?
“Global peace is an ideal form of freedom, peace, harmonious atmosphere, and
happiness among and within all nations and/or peoples.” It is the idea of a world in which
nations willingly cooperate with each other, regulated by a strong system of governance which
prevents warfare.
Unlike what past theories implies, new emerging theories claims that “peace and
harmony may be influenced and brought nearer to reality through burgeoning world trade”
rather than trade as a function of global peace. I choose to believe that trade, as well as other
things, promote and brings about peace. Understanding that trade and international marketing
play an important role in procuring peace and in turn, it is during peaceful times that trade and
international marketing flourishes and thrives the most. international trade brings individuals
and various entities together through the motivation of doing business interaction. And, all this
interaction yields not just the mutual gain associated with business relationships – it also creates
personal relationships and mutual understanding. Trade is actively bringing all people of
different boundaries together. These are the foundations of global peace and prosperity.
4. Cite and example of yourself engaging in international business.
I personally believe that anyone can engage in international business.
Foreign market entry options include exporting, joint ventures, foreign direct investment,
franchising, licensing, and various other forms of strategic alliance.
When considering entering international markets, there are some significant strategic and
tactical decisions to be made. Exporting, joint ventures, direct investment, franchising, licensing,
and various other forms of strategic alliance can be considered as market entry modes. Each
entry mode has different pros and cons, addressing issues like cost, control, speed to market,
legal barriers, and cultural barriers with different degrees of efficiency.
In this arrangement, the franchisee will take the majority of the risk in opening a new
location (e.g. capital investments ) while gaining the advantage of an already
established brand name and operational process. In exchange, the franchisee will pay a
certain percentage of the profits of the venture back to the franchiser. The franchiser will
also often provide training, advertising, and assistance with products.
Franchising is a particularly useful practice when approaching international markets. For
the franchiser, international expansion can be both complex and expensive, particularly
when the purchase of land and building of facilities is necessary. With legal, cultural,
linguistics, and logistical barriers to entry in various global markets, the franchising
model offers and simpler, cleaner solution that can be implemented relatively quickly.
Franchising also allows for localization of the brand, products, and distribution systems.
This localization can cater to local tastes and language through empowering locals to
own, manage, and employ the business. This high level of integration into the new
location can create significant advantages compared to other entry models, with much
lower risk.
Exporting is the practice of shipping goods from the domestic country to a foreign
country.
Export of services consist of all services rendered by residents to non-residents. In
national accounts, any direct purchases by non-residents in the economic territory of a
country are recorded as exports of services; therefore, all expenditure by foreign tourists
in the economic territory of a country is considered part of the export of services of that
country. International flows of illegal services must also be included.
National accountants often need to make adjustments to the basic trade data in order to
comply with national accounts concepts; the concepts for basic trade statistics often
differ in terms of definition and coverage from the requirements in the national accounts:
Imports are the inflow of goods and services into a country’s market for consumption.
You can extend the sales life of existing products and services by finding new markets to sell
them in.
You can reduce your dependence on the markets you have developed in the United States.
If your business is plagued by destabilizing fluctuations in your markets due to seasonal changes
or demand cycles, you can even out your sales by tapping markets with different or even
countercyclical fluctuations.
You can exploit corporate technology and know-how.
Finally, by entering the global marketplace, you'll learn how to compete against foreign
companies-and even take the battle to them on their own ground.
Importing Products and Services
International trade involves more than shipping U.S. products overseas. For many products,
foreign sources of supply can provide higher quality, lower cost or some other desirable feature
in comparison to U.S. sources. For instance, Italian shoes, French wines and Japanese cameras
are widely available in the United States because of their recognized superiority in some respects
to domestic alternatives.
Importing doesn't have to be limited to goods, either. Many companies have grown by importing
services in imaginative ways. For instance, a large quantity of the data-entry work that used to be
done in the United States is now done by workers in countries such as India and China. The
companies for whom this work is being done have effectively imported the data-entry services of
international workers.
At one time, identifying sources of products to import was a serious challenge for American
importers. But vast improvements in the global telecommunications network have greatly eased
that task. Today anyone with a computer and a modem can do Web searches to locate suppliers
virtually anywhere in the world. Furthermore, they can communicate with those suppliers,
exchanging specifications and requirements far more easily, swiftly and conveniently than ever
before. If you have an idea for importing a product made in another country, it should be easy to
find a supplier who can sell it to you. Here are tips for finding a source of products to import:
Start by focusing on countries whose imports to the United States are granted favored status.
This means lower import duties and lower cost for you.
Once you've selected countries as likely sources, contact trade representatives at the
appropriate embassies. They should be able to provide you with lists of manufacturers of the
products you're interested in.
Attend foreign and domestic trade fairs where companies seeking to export to the United States
are exhibitors.
Read U.S. and foreign newspapers and magazines, scanning for advertisements and articles
about products you might want to import.
The Internet is having a large impact on the way international business is conducted. This impact
is especially significant when it comes to finding leads for international trade partners. You can
look at TradeNet , the U.S. government's online trade-matching service, for numerous links,
databases, message boards and other tools for finding products to import and other opportunities
to grow your business internationally.
Once you've identified some likely sources of products to import, make contact with the
company and begin gathering information. You'll want to obtain samples of products and, of
course, discuss prices and terms of payment. Take special care to check the quality of the
products-the United States is a sophisticated marketplace, and shoddy products that might
succeed elsewhere will be shunned here.
As in any circumstance where you're checking out a new prospective supplier, ask for references.
Get a referral to a company that has dealt with this supplier before, and call to check them out.
Shipping procedures are a paramount concern when moving products long distances. High-value
items may be shipped by air, but many products come by ship. This often means transit times
measured in months, with the associated risks of missing market opportunities. Make sure your
supplier understands your requirements for delivery and that the shipping procedure chosen will
do the job. Once you are happy with the arrangements, have an attorney experienced in
international trade review the contract.
Why Go Global?
International expansion is not necessarily the best way to grow your company. The U.S. market
is big enough for most small businesses to expand almost indefinitely. But entering the
international arena can protect you against the risk of decline in domestic markets and, most
important, significantly improve your overall growth potential.
8 Benefits of International Trade | Export Management
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The benefits that can be identified with Reference to International Trade
are as follows:
International trade allows countries to exchange good and services with the use of
money as a medium of exchange. The benefits of international trade have been the
major drivers of growth for the last half of the 20th century.
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Nations with strong international trade have become prosperous and have the power to
control the world economy. The global trade can become one of the major contributors
to the reduction of poverty.
Several benefits that can be identified with reference to international trade
are as follows:
1) Greater Variety of Goods Available for Consumption:
International trade brings in different varieties of a particular product from different
destinations. This gives consumers a wider array of choices which will not only improve
their quality of life but as a whole it will help the country grow.
2) Efficient Allocation and Better Utilization of Resources:
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Efficient allocation and better utilization of resources since countries tend to produce
goods in which they have a comparative advantage. When countries produce through
comparative advantage, wasteful duplication of resources is prevented. It helps save the
environment from harmful gases being leaked into the atmosphere and also provides
countries with a better marketing power.
3) Promotes Efficiency in Production:
International trade promotes efficiency in production as countries will try to adopt
better methods of production to keep costs down in order to remain competitive.
Countries that can produce a product at me lowest possible cost will be able to gain
larger share in the market.
Therefore an incentive to produce efficiently arises. This will help to increase the
standards of the product and consumers will have a good quality product to consume.
4) More Employment:
More employment could be generated as the market for the countries’ goods widens
through trade. International trade helps generate more employment through the
establishment of newer industries to cater to the demands of various countries. This will
help countries to bring-down their unemployment rates.
5) Consumption at Cheaper Cost:
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International trade enables a country to consume things which either cannot be
produced within its borders or production may cost very high. Therefore it becomes cost
cheaper to import from other countries through foreign trade.
6) Reduces Trade Fluctuations:
By making the size of the market large with large supplies and extensive demand
international trade reduces trade fluctuations. The prices of goods tend to remain more
stable.
7) Utilization of Surplus Produce:
International trade enables different countries to sell their surplus products to other
countries and earn foreign exchange.
8) Fosters Peace and Goodwill:
International trade fosters peace, goodwill, and mutual understanding among nations.
Economic interdependence of countries often leads to close cultural relationship and
thus avoid war between them.
