International business management

Topics: Investment, World Trade Organization, Decision support system Pages: 8 (2494 words) Published: January 1, 2014
International Business Management
Introduction
Nowdays the world is like a globalised stage where the barriers to cross-border and investment have been broke down, the national economies are merging into an interdependent global economy system. Therefore, international business has become a very important role in the world economy. According to P. K. Sinha and S. Sinha (2008), international business is all commercial transactions- private and governmental- between two or more countries which including sales, investments and transportation. All companies, whether large or small, can obtain a great amount of benefits by engage in international business such as expand sales, acquire resources and diversify or reduce risk. International business management is concerned with the international business evironment, the strategy and structure of intenational business, country differences in political economy and culture, the type of business operations and the impact of techniques on businesses opereate intenationally such as information systems. This report will expand the analysis of how companies implement their strategy to achieve goals which based on the case study of Asea Brown Boveri (ABB) company, analyse the investment environment in China and also how infomation system affect intenational business. 1.1 The Reasons for ABB bought Zamech

ABB is the world’s foremost electrical engineering company, the global leader in power and automation technologies (new.abb.com). As can be seen from the case, Mergers and acquisitons (M&As) is one of its long-term strategies. According to C. T. Schlachter and T. H. Hildebrandt (2012), there are some various reasons for M&As: increasing capabilities, gaining a competitive advantage or larger market share, diversifying products or services, replacing leadership, cutting costs and surviving. Regarding ABB bought Zamech, the reasons include: Increasing capabilities

To expand research and development opportunities or even more sturdy manufacturing operations are the ways to increase capabilities. Zamech company is a leading manufacturer of steam turbines, transmission gears etc. in Poland, that means Zamech is a good local brand and possess the majority of skilled labour. Therefore, it is a good choice that ABB acquired a majority holding in a joint venture with Zamech to increase capabilities. Gaining a competitive advantage and larger market share

Companies enter into different markets where a similar company is already operating, and then merge with this company in order to gain a wider distribution and market large network as well as a wider customer base. ABB recognised that most of countries in Eastern Europe have a huge need to upgrade their infrastructures in the energy supply, transportation and environment fields and also many industries must be modernized (ABB annual report 1990). Therefore, ABB took over Zemach in oder to openning up East European markets and enlarge its market share. Diversifying products or services

Two companies enable to combine thier products or services to achieve competitive advantages over other companies, as well as to increase revenue. ABB combined Zamech advance technology to develop worldwide qualify standards and controls for production which be able to help ABB gain competitive advantages in East European markets. Cutting costs

When companies merge, they can create a large amount copportunities to reduce cost. ABB acquired Zamech that help ABB to take advantage of local cheap labour and low production costs to gaining cost efficiency. 1.2 How ABB can link Zamech to its strategic plan

1.2.1 Enlarge geographic coverage by M&A
ABB’s strategy is focused on organic growth, with an eye toward mergers and acquisitions that fill strategic gaps in their geographic, product and end-market portfolio (www.abb.com). Zamech help to falling trade barrier, enables ABB more easier to accesse to Eastern Europe so that expand their geographic coverage....
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