International business Policy

external business PolicyINTERNATIONAL tune POLICYQuestionPorters note that firmlys, not individual terra firma , deal in internationalistic market. How does this statement dish out to explain around of the major challenges face MNEs? How do the determinants of national warlike service help explain how companies aro intention maintain their stinting competitiveness?Answer internationalist business is a exchanging goods and service , conducted between individuals and businesses in multiple countries. Historically, international business exercise first took the form of exporting and importing. Exporting is the selling of carre quadruplet ,goods or services supplied from 1s own estate for use in opposite countries . Importing is the buying of products ,goods or services make in other countries for use in unmatcheds own farming.Exporting and importing activities argon often divided into two groups. first, trade in goods ,that is, tangible product much(prenominal) as clothing, computers , and raw materials. Second, Trade in services, that is ,intangible products such(prenominal) as banking , travel and accounting activities http//www.businessdictionary.com/definition/international-business.htmlInternational business activity nooky also take others forms .* Licensing* Franchising* Management contract* International businessLicensing is a contractual arrangement In which a firm in sensation country licenses the use of its intellectual property for e.g. patents, trademark, cross name , copyrights or trade secrets to a firm in a second country in return for a royalty paymentFranchising , a alter form of licensing ,occurs when a firm in unmatched country classical a firm in a second country to go for its operating system s as well as its brand name ,trademarks , and logos in return for a royalty payment. For guinea pig , McDonalds stomach franchise its fast food restaurant world all-encompassing .A Management contract is an arrangement wher ein a firm is one country agrees to operate facilities or provide other management services to a firm in another countries for agreed upon fees. For example hotel industries.International business as any organization that engages in a cross-border technical transaction with individuals ,private firms or public sector organizationA firm is a commercial partnership of two or more individual , especially, when unincorporated. Also the name or designation under which a federation transacts business. Any business , sole proprietorship, partnership or a corporationThe term multinational entrepreneurs is used to identify firms that feel extensive e haleation in international business. An another definition of multinational corporation is a firm that engaged in impertinent direct clothement an owns and controls value-adding activities in more than one country MNEs generally coordinate their activities from a of import headquarters but whitethorn also al blue their affiliates or sub sidiaries in foreign markets considerable latitude in adjusting their operation to local circumstances. few MNEs , such as accounting partnership and Lloyds of London, ar not original corporation, Some writers distinguish between multinational corporations and multinational enterprises . Further , not for profit organization ,such as the IOC and the International red cross , are not true enterprises ,so the term multinational organization digest be used when one wants to raise to both for not for profit-seeking organization. Because of the common use of multinational corporation in the business press, however , Multinational enterprises facing a major challenges , Some of them are as under economics and Currency conversion Legal systems or Types of system Culture accessibility of resources Market withdrawal Government policy Political juristic milieu and Government PowerIn a domestic business strategy, a single country at a specified level of scotch development in a foc us of the firms entrepreneurial efforts. The entire country is almost always organized as a single economic system and has the same currency. Creating a business for a multicounty are direction dealing with disaccordences in level of economic development, currency valuation governance regulation and banking, venture capital and marketing system. One of the biggest problems entrepreneurs have is pinnacle capital. The amount of private equity capital investment varies greatly by the area of the world, and the amount available is signifi sighttly less elsewhere than the fall in state. In addition, the countries may use different currencies, forcing at least one party to convert its currency for another. So MNEs face currency central problem. The legal systems may vary or even be in compatible. In different countries used there own system of business. corresponding many such barter system or third party arrangement have been used to increase the amount of business activity of the former U.S.S.R. and Eastern and central European countries, as well as other countries in various stages of development and transition .The cultures may differ and the resources may vary. Culture is encompasses a wide variety of elements ,including a language, friendly situation, religions ,political philosophy, economic philosophy education, and manners and customs. The availability of resources ,For example, one country may be rich in natural resources, but poor in skilled labor. Also e.g. U K, U S A , AND CANADA are well developed in technologically than developing countries like Africa , India, Pakistan Still, the fundamental skills and knowledge needed to be successful are generally equal whether one is doing business domestically or internationally.Tax competition countries and sometimes sub national regions must compete against each other for the instauration of MNEs facilitates, and the subsequent Tax revenue- a tax is a financial dilute upon an individual or legal ent ity by a state such that failure to pay is punishable by law, employment ,and economic activity. To compete, countries and regional political districts sometimes offer Incentives is a any financial or non-financial factor that motivate a particular course of work to MNEs such as tax breaks, pledges of governing assistance or glowed infrastructure and labor standards enforcement. Foreign direct Investment Foreign direct investment made for the purpose of actively controlling property ,assets or companies located in host countries, such as factories, building, machinery, land and mines, grow up of foreign direct investment can be used as one of improvement of economic globalization. Map below show net influx of foreign direct investment as a percentage of complete(a) domestic product. The big flows of foreign direct investment occurs between the modify countries like, western Europe and Japan, North America. But flow to non-industrialized countries are grows up sharply.Market with drawal-government policy- Multinational enterprises having a significant impact on government policy because of its size, basically through the threat of market withdrawal, for example , in order to reduce healthcare costs, some countries have tried to force pharmaceutic companies to license their patented drugs to local competitors for a very low fee, so automatically lowering the price ,when faced with the threats multinational pharmaceutical firm have simply withdrawn from the market. Political-legal environment- the multiplicity of political and legal environments in the international market creates vastly different business problem, possible action some market opportunities for entrepreneurs and eliminating others. for example , U S environmental standards have eliminated the possibility of entrepreneur establishing ventures to imports several models of Europeans cars. It also involves the price fluctuations and significant increases in oil and other energy products in the las t few years.http//en.wikipedia.org/wiki/Multinational_corporationDeterminants of nation competitive advantagesMichael Porter tried to explain why a nation achieves international success in a particular industriousness and place four attributes that promote or impede the creation of competitive advantageFactor endowmentsDemand conditionsRelating and supporting industriesFirm strategy, structure, and disceptationFactor endowments quote to a nations position in factors of production necessary to compete in a given industry. A nations position in factors of production can lead to competitive advantage. These factors can be either basic (natural resources, climate, location) or advanced .(skilled labor, infrastructure, technological know-how) Demand conditions refer to the nature of home collect for the industrys product or service. The nature of home pauperism for the industrys product or service influences the development of capabilities. Sophisticated and demanding customers pres sure firms to be competitive.Relating and supporting industries refer to the presence or absence of supplier industries and related industries that are internationally competitive. The presence supplier industries and related industries that are internationally competitive can spill over and contribute to other industries. Successful industries tend to be grouped in clusters in countries having world class manufacturers of semi-conductor processing equipment can lead to (and be a result of having) a competitive semi-conductor industryFirm strategy, structure, and tilt refers to the conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry impacts firm competitiveness. Different management ideologies affect the development of national competitive advantageVigorous domestic rivalry creates pressures to innovate, to improve quality, to reduce costs, and to invest in upgrading advanced features Government policy can affect demand through product standards influence rivalry through regulation and antitrust laws impact the availability of highly educated workers and advanced transportation infrastructure. The four attributes, government policy, and chance work as a reinforcing system, complementing each other and in combination creating the conditions appropriate for competitive advantage