Thirdly, international business has been dominated by the developed countries and MNCs. MNCs are the multinational corporations of the developed countries. The country that dominated and fully controls the foreign trade is USA, Europe and Japan. They have many advantages such as large financial, other resources, best technology, research and development, skilled employees and managers. That was the factors that helping them to capture and dominate the world
Therefore, multinational companies with high labor costs are more likely to enter countries with totally different economic conditions. For instance, companies in developed countries usually enter China or Southeast Asia countries for much lower labor costs. Barney (1991) and Ghemawat (2001) propose that rich countries, participated in more cross border deals. On the other side, companies which rely on economies of scale, scope and standardization tend to enter countries that are similar to their home countries, because they need to replicate the operations and business model to gain competitive advantage. Based on Transaction Cost Theory, a greater economic distance between the home country and the target country may result in higher transaction costs.
It is evident, the profits of U.S.-based companies have increased due to globalization and majority of it come from their foreign counterparts. Moreover, globalization has lowered the cost of several goods and services here in the U.S. Likewise, globalization has made it easier to produce more goods and increase services in countries where the costs are lower. Flexible accumulation in the United States has allowed for companies to move their production facilities and activities around the world and even within a nation in search of cheaper labor, and lower taxes, to accumulate as much as profit as possible. This is all fine for the companies and organizations who are gaining money, but not so good for the workers who used to work at these companies before they were offshored and outsourced.
The opportunity to make profit by selling products in a foreign market is attractive, especially if expansion in the home market is difficult because of slow market growth, market saturation, or regulatory obstacles. In many cases business growth would be possible only through “stretching” the business globally and enter in new markets. International exposure also enables a company to build its international reputation, which is important for the company especially if it is an industry leader. Profitability also depends on competitiveness, so international expansion is a way of reducing costs in a competitive international market. Access to international markets allows increased scale of production, leading to lower cost per unit.
But by what factors the corporation play in our lives and society? In fact, corporation plays in our live and society a huge role, even if there are both benefits and disadvantages. Term corporate responsibility refers to growing number of companies access responsibility of principles and values connected with business operations. By a hilarious number of corporations all over the world, they could give the jobs for an impressive group of people, investing in industries, producing plenty of widely used goods, can achieve a huge success and create wealth, which is well-known as a status of well-being. These aspects can be linked to economic growth which refers to increase in a productive capacity, an
Thirdly, international business has been dominated by the developed countries and MNCs. MNCs are the multinational corporations of the developed countries. The country that dominated and fully controls the foreign trade is USA, Europe and Japan. They have many advantages such as large financial, other resources, best technology, research and development, skilled employees and managers. That was the factors that helping them to capture and dominate the world market.
Generally, big companies advance their knowledge of market, stay close to their customers, and prefer to develop existing technology gradually. Nevertheless, they experience difficulties with capitalizing on the potential efficiency, cost-savings, or new marketing opportunities created by low-margin disruptive technologies. Therefore, by doing so, companies provide an opportunity to “disruptive innovations” at the bottom of the market (Danneels 2004). It allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. Generally, products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use (Yu& Hang 2008).
During the last few decades, globalization has grown to be a leading concept in business. Globalization affects the economy in its different segments, the business society and the environment in total. A set of dynamic processes, globalization is transforming the world into only globality; a nature of intense economic, political, social and cultural interconnections that hinder borders of all sorts of trade. All corporations have been affected by the changes caused by globalization. It leads to increased competition.
Other than that, global trade allows wealthy countries to use their resources—whether labor, technology or capital— more efficiently. Because countries are endowed with different assets and natural resources (land, labor, capital and technology), some countries may produce the same good more efficiently and therefore sell it more cheaply than other countries. If a country cannot efficiently produce an item, it can obtain the item by trading with another country that can. This is known as specialization in international trade. However, international trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging
That partnership was thought as an opportunity to grow for that company mentioned. One professor suggests three general advantages of FDI on capital, these are ; 1)company presidents have less risk with the help of free flow of capital around the world. With the different financial instruments, president can distribute the risk. 2) If the money and capital markets become worldwide, that situation increase the quality of capital and money governance and management, gathers more modern regulations. 3) With the integration to international system of capital flowing, country’s governments must have some limit to make bad policies.