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The Concept of International Business: Analytical Essay

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Globalization as a process is characterized by the fact that international business is developing practically in all countries of the planet and all of them depend on it. The results of this are ambiguous, on the one hand, the country enjoys all the benefits and opportunities, but on the reverse side – the payment for these opportunities and benefits is the country’s dependence on world markets. International business is viewed by the phenomenon and process of international economic relations.

  1. As a phenomenon, international business is a specific form of interaction between subjects of international relations for profit and benefits.
  2. From the point of view of the process – international business is a manifestation of a certain type of interaction between subjects of international relations, with the structure, their conditions, rules of conduct, and to the same results to which this interaction leads. Subjects of international relations are participants in this process who are endowed with motivation, goals and abilities to realize this in a certain sphere of international relations (individuals, companies, state organizations).

International business represents operations carried out by partners from more than one country (purchase of materials in one country and transportation to another country for further processing, and others). National business is necessary for carrying out business operations within the borders of one state, while international business can cross borders. Therefore, international business differs significantly from the national one.

The selected product is APR ECU software to make cars faster. Volksmuller is making this product and Zimbabwe is the target area where a new international business will be set up. According to the annual Doing Business rating of 2011, which estimates 183 countries of the world and ranks them for ease of doing business in these countries, Zimbabwe ranks 157th. This indicator is better than that of South Africa, Namibia, Botswana, Swaziland and Lesotho. In the rating of the ease of establishment of commercial companies, the country is on the 143rd place, so there are four major opportunities doing business in Zimbabwe.

Consumer-oriented business: Any company that enters the market to provide lifestyle and consumer products may benefit from the country’s unmet needs for many years. If the middle-class benefits from improved economic conditions and more cash income, consumer demand is likely to increase. Low-income consumers also offer lucrative opportunities.

The influx of capital may also lead to the revival of formal retailing (such as supermarkets, shopping centers) in the next few years, as its infrastructure does not need to be built from scratch. This means that consumer-oriented industries will easily gain consumer support. (Kose, and Whiteman 2003)

Technology: Mobile banking and mobile payment providers have performed particularly well in the economy due to the country’s multi-currency exchange system and the low availability of the US dollar .

Technical solutions that help accelerate the improvement of Zimbabwe’s aging infrastructure will also face high demand. At present, Zimbabweans are very good at using technological innovation to solve their daily life challenges. Any company that can provide them with practical solutions for financing, rebuilding infrastructure and mitigating power distribution issues can benefit from this environment. (Hill,2008) Rise in spin festivals – drivers drifting cars may require this software has it enhances engine performance without having to alter the engine hardware. The turbocharger was replaced with the ‘IS 38’ type for ‘ Golf R ‘, and the APR carbon fiber intake system, turbo inlet, exhaust down pipe, turbo muffler delete, custom cat back exhaust system Attached. By tune the ECU, we succeeded in demonstrating a maximum output of 350 hp and a maximum torque of 475 Nm which greatly exceeds the VR 6. It is said that this custom atlas tuned by APR is four-wheel drive. VW seems to have changed the engine of the base vehicle or retrofitted the four-wheel drive system because the US and Canada did not introduce the 4-cylinder engine and 4-wheel drive combined atlas.

For larger SUVs the better the power, the better, but the tires that convey that power to the road are also important. APR is a Toy Tire ‘Open Country M / T’ 275/55/20 size mounted on a 20 x 9-inch lightweight forged wheel. To ensure a sufficient minimum ground clearance, the suspension raised the car height 1.5 inches (about 38 mm) and said that the trailing arm of the rear was changed accordingly. In order to control the improved speed, the brake is also reinforced with a 6 piston calliper and a 350 mm large disk.

Talent: Zimbabwe has one of the most powerful education systems in Africa, so it has many highly qualified personnel, which means that companies can find local businesses relatively easily.

Why APR?

One of the popular types of engine tuning is the installation of so-called cold inlet systems designed to reduce the degree of heating of air entering the engine, in order to increase the efficiency of filling the cylinders. This has a positive effect on both the power characteristics and the reduction of fuel consumption. APR has developed several highly effective systems of cold intake made of carbon fibber. The use of innovative materials based on carbon fiber and aircraft technology in production, allowed to obtain a high-quality product with unique characteristics that significantly exceed the factory analogues.

Another feature of the design of the cold inlet system APR is the creation of additional pressure in the intake manifold from the incoming air flow. The low-resistance filter element is positioned as close as possible to this zone at the front edge of the bonnet, from where the air is drawn.

Optimization and increase in the speed of air movement is also achieved by reducing the number of bends and turns of the intake tract, which are present in the factory version. The Carbonio system simplifies the intake system by directing all incoming air streams directly to the filter.

Potential risk

International investment risk refers to the difference between the actual income and the expected value of international investment projects or the economic loss of international investment due to the existence of various uncertain factors in the specific environment and specific time.

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International investment business risk refers to changes in investment economic losses due to changes in business environment, business strategy, and business decisions. risks are supposed unforeseen situations that bring unnecessary costs or other harm to enterprises engaged in foreign economic activity. (Castellani, Narula, Nguyen, Surdu, and Walker 2018).

Cultural differences are often categorized as soft factors and underestimated according to the name. Even the most patient person can, after a few years of misunderstandings, finally break the patience. Cultural differences are often known as creeping barriers to entry that, while initially relatively easy to ignore, subsequently accumulate into major difficulties. Therefore, it is usually worthwhile to choose the member country within a free trade zone, which has the most similar culture .

Logistics and its hurdles

For most of manufacturing companies, freight transport or logistics appears to be an insurmountable entry barrier. Transporting medium to heavy items by air freight to North America is a very expensive affair that is rarely worthwhile. For example, an item of the size of, for example, a hand-held lawnmower will quickly cost you 300 CAD per item, which is more than the product itself is worth, and will take three to five days to arrive at the customer.

Different from the nature of risk, it mainly includes four categories: business risk, political risk, tax risk and legal risk. When companies invest abroad, in order to succeed, they must fully consider the various risks in the investment decision-making and business operations and take effective measures to avoid them.

Business risk is the most direct and common risk

Market risk is one of the most direct risks of the most critical impact of overseas investment. The macroeconomic environment of the host country and the industry environment and industrial problems of foreign direct investment enterprises, such as overcapacity in the industry, will directly affect the success of overseas investment. Specifically, macroeconomic risks include instability in macroeconomic development, severe inflation, imbalances in international payments, exchange rate fluctuations, and interest rate risks. Among them, the risk of exchange rate fluctuation is a common risk in the economic risk of foreign investment. The typical example of the risk of exchange rate fluctuations in 1990-1993. Due to the depreciation of the ruble, the enterprises operating in Russia or Eastern Europe have become profitable and even lost.

Credit risk is one of the most common risks for companies to invest abroad. In the process of enterprises going out, it is very likely that they will seek the assistance and cooperation of local enterprises or institutions (Muzychenko 2008). Due to the lack of understanding of the credit system of the country where the investment is made, or the due diligence of the cooperative enterprises is insufficient, they often encounter dishonest cooperation. credit risk. However, once the dishonest cooperation occurs, the investment of enterprises is likely to suffer a large degree of loss, so credit risk is also a part of enterprises that need to be guarded out when going out.

Environmental risks are one of the risks that companies need to pay attention to when they go out. Outside the country, it is often the case that after enterprises invest, they need to meet the requirements of environmental protection regulations to increase investment or force the project to stop production, and the environmental protection measures adopted by enterprises in the investment production process can not reach the expectations of local people and cause protests and even losses. Different environmental protection requirements in different regions are different from the threshold. As the environmental protection threshold has increased the burden of some overseas mining investment projects, and even caused the project to stop production, such as the CITIC Group’s Western Australia magnetite project has been aggravated by local environmental requirements. The time and economic costs of the enterprise also increase the uncertainty of the project.

Talent risk is one of the risks that companies must face when investing abroad. It is also one of the biggest bottlenecks for companies to go global. From the beginning to the end of the international mergers and acquisitions, auditors and accountants are required to make assessments for the target companies. Media contacts and lobby groups are needed. This is related to the political risks of future projects and the degree of public acceptance. At the same time, whether corporate talents can have continuity, retain key talents, and accumulate experience in overseas investment is also a challenge for companies. The key to the success of these offshore businesses is finding the right people and retaining those who are experienced. companies need to have the ability to innovate, build new rules of the game, and transformative talent.

Intellectual property risks mainly include four categories: intellectual property legal risks, intellectual property barrier risks, intellectual property rights risks and intellectual property abuse risks. In the process of “rushing to the beach” in foreign markets, enterprises are in a passive position because they do not understand the intellectual property legal system of the country where they are invested. Under the background that traditional trade barriers are increasingly restricted by international treaties, countries, especially developed countries, often place obstacles on the goods, technology trade and investment involving intellectual property rights of enterprises in the name of intellectual property protection, forming intellectual property barriers and hindering them. (Daniels, Radebaugh and Sullivan2002). The overseas investment of enterprises has been smoothly carried out. In addition, in the process of hiring foreign employees, entrusting development, cooperative development or direct investment, enterprises are prone to problems such as leakage of trade secrets, resulting in foreign investment being blocked or halfway. Before “going out”, enterprises should fully assess the risks of intellectual property rights so as not to fall into the intellectual property trap. (Kose, Otrok and Whiteman 2003)

Cultural risks are often overlooked in overseas investment by companies, but this may play a key role in the success or failure of overseas investment. Overseas investment is not only reflected in the international flow of capital, but also in the exchange, integration and collision of culture. Some unhealthy cultural conflicts are likely to affect the company’s policy operations, resulting in the loss of corporate overseas investment. October 2012, one in Cambodia ‘s business managers due to the torn portrait of Cambodia Prince, causing protests and riots of the people of Cambodia, and finally the manager was arrested by the police and deported. (Picciotto, 2017).

In addition, investors have repeatedly encountered labor risks in their overseas investments. Nearly 35% of the 120 failed samples of global think tanks for companies “going out” have experienced labour problems and are likely to suffer economic losses. Therefore, enterprises need to understand the local labour situation before starting overseas investment, establish contact and trust with local trade unions, and lay the foundation for the smooth development of overseas investment. (Czinkota, Ronkainen and Moffett 2002)

Political risk is a problem that cannot be ignored

In addition to commercial risks, political risks are also an issue that cannot be avoided by every company that “goes out”. Political risks are often overlooked by companies because of their small probability and unpredictability, but once they occur, the losses faced by investors are even more serious. For example, the turmoil in the Middle East and North Africa has caused more people to pay attention to political risks. The armed conflict and civil strife in Libya are typical political risks, which have caused some investors to suffer heavy losses. (Van Tulder, R. and Van der Zwart 2005). Common political risks such as war, turmoil, nationalization, government defaults, etc. Many overseas investment projects have the characteristics of large project value and long investment cycle, which determines the importance of long-term risk management of the project. The shortage of resources and the rise of prices, the prevalence of nationalism and investment protectionism, the frequent changes of government, the unpredictable changes in policies and laws, the widening gap between the rich and the poor, the harassment of local separatists, the conflict of race, religion and ideas, The aggravation of environmental pollution and various forms of civil war have caused many overseas investment projects to face great political risks in the host country.

Conclusion

international business is viewed by the phenomenon and process of international economic relations. The new launch is APR–and location is Zimbabwe. The selected product is APR ECU software to make cars faster. Volksmuller is making this product and Zimbabwe is the target area where a new international business will be set up. According to the annual Doing Business rating of 2011, which estimates 183 countries of the world and ranks them for ease of doing business in these countries, Zimbabwe ranks 157th. The uniqueness of the product apr is protected from forgery, because each set has a unique number and comes with a holographic security sign carbonic. APR has developed several highly effective systems of cold intake made of carbon fiber. The use of innovative materials based on carbon fiber and aircraft technology in production, allowed to obtain a high-quality product with unique characteristics that significantly exceed the factory analogues

References

  1. Castellani, D., Narula, R., Nguyen, Q.T., Surdu, I. and Walker, J.T. eds., 2018. Contemporary Issues in International Business: Institutions, Strategy and Performance. Springer.
  2. Czinkota, M.R., Ronkainen, I.A. and Moffett, M.H., 2002. International business. Harcourt College Publishers.
  3. Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P., 1998. International business: Environments and operations. Addison-Wesley.
  4. Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P., 2002. Globalization and business. Prentice Hall.
  5. Hoecklin, L.A., 1995. Managing cultural differences: Strategies for competitive advantage. Addison-Wesley Longman Limited.
  6. McDougall, P.P., Shane, S. and Oviatt, B.M., 1994. Explaining the formation of international new ventures: The limits of theories from international business research. Journal of business venturing, 9(6), pp.469-487.
  7. Hill, C., 2008. International business: Competing in the global market place. Strategic Direction, 24(9).
  8. Intriligator, M., 2017. Globalisation of the World Economy: Potential Benefits and Costs and a Net Assessment. In Economics of Globalisation (pp. 85-94). Routledge.
  9. Kose, M.A., Otrok, C. and Whiteman, C.H., 2003. International business cycles: World, region, and country-specific factors. american economic review, 93(4), pp.1216-1239.
  10. Picciotto, S., 2017. Rights, responsibilities and regulation of international business. In Globalization and International Investment (pp. 177-198). Routledge.
  11. Kobrin, S.J., 2009. Political risk: A review and reconsideration. Journal of international business studies, 10(1), pp.67-80.
  12. Muzychenko, O., 2008. Cross-cultural entrepreneurial competence in identifying international business opportunities. European Management Journal, 26(6), pp.366-377.
  13. Vernon, R. and Wells, L.T., 1986. The economic environment of international business. Englewood Cliffs, New Jersey: Prentice-Hall.
  14. Van Tulder, R. and Van der Zwart, A., 2005. International business-society management: Linking corporate responsibility and globalization. Routledge.
  15. Zahra, S.A., 2005. A theory of international new ventures: a decade of research. Journal of International Business Studies, 36(1), pp.20-28.

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The Concept of International Business: Analytical Essay. (2022, July 14). Edubirdie. Retrieved December 8, 2022, from https://edubirdie.com/examples/the-concept-of-international-business-analytical-essay/
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The Concept of International Business: Analytical Essay [Internet]. Edubirdie. 2022 Jul 14 [cited 2022 Dec 8]. Available from: https://edubirdie.com/examples/the-concept-of-international-business-analytical-essay/
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