Issues of Global Business - Essay Example

Issues of Global Business Regionalization Concept of regionalization involves regionalization of markets as well as segmentation of product lines for the purposes of broad basing the market. This is for the purposes of ensuring meticulous techniques of marketing various products of the company including distribution. Regionalization supports trades in the same area when viability of markets get stabilized in regional areas and repeat market also emerges from the same area. Another aspect is that the demand based on assessment is prevalent in the same area for product lines of the company. Such a fact emerges from multinational companies’ market research effort. It is profitable for multinational companies by augmenting turnover and net realizations that is a shade about the budgeted levels to create a favorable market atmosphere that enhances a perfunctory quest that creates an economic business model augmenting profitability. The process of integration involves adequacy of measure of independence as well as autonomy. It also ensures a world in which agreements are executed for free flow of trade for establishment of links through the movement of goods labor across borders, services capital for ensuring a positive attachment for bringing about generation of revenues that would pave the way for growth and development of the company. From the extreme point of view it can be visualized that a global economy in the real sense of the term during which all countries would share a common currency. The integration levels are indicated of consideration of tariff barriers as well as non-tariff barriers. Customs union would be able to remove the tariffs amongst the member countries but they do have a barrier that is common against imports from non-member countries. It is distinguished from free trade area in which a common external tariff does not form part of the parameters and framework of customs union. In a common market the free flow of trade with certain other countries for forming the base of economic integration that not only involves common external tariff including a common market. This is purported to be free flow of factors of production such as capital, labor, capital enterprise and technology amidst member countries. In economic union that removes barriers in internal trade by adopting a common external policy through the medium of abolition of restrictions on free flow of factors of productions. This can happen by providing for economic integration. Political union is deemed to be the highest layer of integration. It also can be tacitly understood for formal political needs between various countries. The unification of Germany is an example for illustration. It is also translated in terms of certain countries’ flags denoting the amity with certain countries and representation through the medium of all presidents. The European Union is a classic example that is all pervasive in terms of creation of a milestone of common currency and a common market amidst European countries. Such a union generates revenues for the development and growth of common markets. Common markets are commendable because of policies that are favorable (Hitt et al., 2009). 2. Small and Medium Enterprises (SME) Small and medium enterprises have a strategic edge of creating benefits due to adequacy of measures that are conducive for the development and growth SMEs. The SWOT analysis indicating advantages and disadvantages briefly can be summarized as under. Strengths are favorable governmental policies, economy of operations, pricing flexibility, and adequacy of demand. Weaknesses are lower level of business activities, wafer-thin margins, inadequacy of levels of investments on expansion and excessive competition unless specialized in InfoTech or medical spheres. Opportunities are with adequacy of business, opening of new outlets and tax sops for enhancement in business operations in specified areas. Threats are lower returns unless specialized, competition, creation of limited choice of product lines, service network entailing limitations of low levels of returns in terms of pricing of services. Employment potential in SMEs is also plausible at certain rates unless they are multiple chain stores with better remuneration. Types of SME are low scale of manufacturing of certain products based on health and InfoTech. Services rendered for InfoTech services including internet browsing opportunities. Quick growth SMEs are showroom in retail or Fast moving consumer goods segment with high demand for the products. Small and medium enterprises are an additional source of growth of income from various sources that benefit growth of companies in multifarious directions with accent on strategic growth and development. The capabilities of such companies are further emboldened with an idea that has been developed that SMEs are also sources for mushrooming growth of industries. The source of moot point that should be noted is that the ratio of income from SME and other segments of market should be determined by the management based on pattern of consumer behavior in previous years as well as the current trend. The aspects of positive development are further accentuated with a thrust on benefitting various segments for the development of various sources of income from operations that would generate revenues for furtherance of turnover (Harte, 1997). 3. Conventional path for International Corporate Presence Various companies decide to evolve strategies for the purposes of driving growth and development. The process of globalization and international presence is called for the purposes of deriving benefits from exports and capitalized on earnings in foreign exchange. The economy also gives a thrust for such companies and favorable measures are evolved to encourage them to generate foreign exchange reserves as well as foreign direct investments. The conventional path that is required to be followed is to plan the sources of buyers with confirmed orders in hand for certain product lines in terms of dollar values. The products should be suitably priced for generating adequacy of demand in foreign countries and a market trend needs to be maintained for distribution pattern to various countries based on their expectancies and buying behavior. The instructions of foreign buyers for delivering should be strictly adhered to avoid complications. The aspect of realization of payment is also accentuated with safety and hence, a conventional path based on assessment of pattern of demand of buyers’ assessment that would further push up manifold aspects for companies auguring well with good rapport. For the development and growth of business prospects for distribution throughout the world for reaping the quintessence of the efforts of exports the calculated risks as well as advantages should be really understood. The calculated efforts for the development of exports is based on advantages of foreign exchange realizations, timely receipt of payments after clearance and after specified days of bill of lading, release of payment many a times before with some more than 50% of advance enables good quality of logistics for engagement and safe delivery for all times to come. Risks are various documentation procedures for exports that should be clearly understood and improper maintenance would jeopardize the consignments’ payments after delivery of goods. Another risk that is prevalent is safe reaching of goods to buyers without any breakage on the way in low container load or full container load depending on the quantum of goods that would be sent to the buyers. Also the requirements of customs for the purposes of clearance in all the countries should be complied with. These normally are indicated in buyers’ correspondence and continuous experience based on practices as well as precedents. The capability of NESTLE and its origin dates back to nearly a century and from United States of America it has extended capabilities of acquisition of overseas companies manufacturing confectionery and food products. This also includes health based products for the purposes of inducement of energy and the company has spread its wings throughout the world by a spree of acquisitions including India. The results of the company are pretty good market capitalization very high and earning per share as well as profitability is quite high. Hence, it has created value for all its stakeholders and the shares are listed with a high price in bourses (Stonehouse et al., 2009). References Hitt, M.A., Ireland, R.D. & Hoskisson, R.E. (2009). Strategic management: competitiveness and globalization : concepts & cases, Cengage learning. Harte, J. (1997). Management crisis & business revolution, New Jersey: Transaction Publishers. Stonehouse, G., Campbell, D., Hamill, J & Purdie, T. (2009). Global And Transnational Business: Strategy And Managemen, New Delhi: John Willey & Sons, Read More