This report is written as a final assignment for the course ‘International Accounting’. In this report, the author will discuss about international business, objectives of international business, and the issues related to international accounting will also be discussed. The author will be concentrating on current issues in international accounting as well as the possible future issues related to international accounting. Finally, the report will end up with a conclusion and possible references in the end of the report.
International Business and its objectives
International business has been the biggest interest for a growing company. Companies are created to achieve growth and to gain huge profit for the shareholders or the owner of the company. When a company starts growing in its home country, then it seeks to do business outside from the territory of home country and start operation in other territories of foreign countries. Here starts the concept of international business. Several books and authors have defined international business in their own terms and some of the definition has been mentioned below. According to safaribooksonline.com; “International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations. These transactions take on various forms, which are often interrelated. Primary types of international business are export-import trade and foreign direct investment. The latter is carried out in varied forms, including wholly owned subsidiaries and joint ventures. Additional types of international business are licensing, franchising, and managing contracts. (Definition of International Business) According to icmab.net; “International business is the performance of business across national boundaries. Every nation in the world participates in international business to some extent. All countries are not endowed with the same type of natural resources. A country specializes in the production of those goods for which it has maximum advantages. It can produce those goods at lower cost and export the same to other countries. It imports those goods which it cannot produce or for
which it has no specific advantage. This is the basis of international trade.” (Define international Business) So from above two this definition it is clear about basic ideas of international business and the next thing that company should understand is the objective of companies that are involved in international business. The main objectives of companies to get involved in international business are listed below. 1. To build brand image 2. Sales growth 3. Access to scarce resources 4. Leverage core competition 5. Too small home market 6. External initiatives to spread the product 7. To diversify sources of sales and supply 8. Rules and regulation 9. Diversify risks 10. Increase customer demand (Reason for going international) s In is now clear from the above bullet points about the company’s main objective for going global. It is very rare that every company that has gone global has succeed, but there are some companies which has achieved their objectives and doing well in outside market from their home market. There are several factors that prohibit company’s becoming successful and the company which can properly manage these factors grows prosperous and huge. And the one which fails gets either bankrupt or leave the foreign markets. The lists of factors that affect companies that are operating globally are listed below. External factors: 1. Importance of environmental factors 2. Economic environment 3. Social environment 4. Political environment 5. Cultural environment 2
6. Technological environment 7. Legal environment 8. Competitive environment The above mentioned factors are the major hindrance for companies operating outside their home country. The one which can play well with this kind of factors can...