A Literature Review on International Business
Engaging in international business is one of the most important factors that a businessman must consider in order to gain more financial strength and stability for his company. One reason of investing to other countries provides a much larger opportunity for growth. But the success of a business also depends on choosing the right country to transact with, and having the ability to negotiate with that country in terms of their rules and policies, in a fairly considerable way. To be able to do this would guarantee both countries’ relationship to be beneficial. On the other hand, most developed countries trade and invest with developing countries because of less competition in terms of quality and innovation. However, it’s not easy as it looks to deal with some of these countries because of the non-tariff barriers that they employ within their own territory. Non-tariff barriers is a legal means of implementing restrictive labeling requirements, health certifications and also discriminations on product standards; government subsidies and countervailing duties; quantitative restrictions, customs clearances and quotas. To make matters more complicated, some informal non-tariff barriers are also being practiced. These practices refer to unpleasant deals like bribes and unnecessary approvals that exist within a country’s import cycle. This might have resulted from poor management, or perhaps from corrupt government officials. Certain organizations and agreements regarding trade policies, like the World Trade Organization (WTO) and the General Agreements on Tariffs and Trade (GATT), have already been established to promote order in the trade industry. But because of non-tariff barriers, any country can perform informal non-tariff barriers for it is beyond the WTO’s scope of authority. Actions such as this can cause delays in business transactions that would eventually lead to unfavorable effects.
For decades, men have been dreaming to surpass their limitations by uniting the world spiritually, intellectually, emotionally, and economically. Spiritually, in a sense of spreading the gospels of each groups’ religion to convert as many as they can. Intellectually, in a sense of passing common knowledge to take away the naiveté of the world. Emotionally, by updating each other about the current situations to be able to sympathize or reach out to those countries in need. And finally, economically united, progressive and productive without the shackles of poverty and misery. As ambitious as the human beings can get, none of these dreams have been achieved yet. The world is still divided in all these forms perhaps because of men’s nature of individuality – especially in the battlefield of international business, where survival is a necessity. When one says international business, what does one means? In the book “International Business: An Operational Theory,” by Richard A. Farmer and Barry M. Richman (1966), International Business (I.B.) is generally business operations of any sort by one firm which take place within or between two or more independent countries. Farmer and Richman (1966) also included that the general study of I.B. is subdivided into various branches of study (which will be later discussed) such as: The operation of domestic firm in domestic branches; export and import trade; comparative management; comparative economics system; and functional business analysis. A more recent definition of I.B. is that it consists of transactions and activities that occur between people or organizations from different countries, which take on various forms (Arpan, 1993). All in all, international business is usually defined as the transfer of factors of production owned by organizations across national borders, or the transfer of parts of that organization across national borders. (Agmon, 1989).
On the other hand, the...
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