Analysis of the Articles of the Basic Principle of Global Business - Coursework Example

? Global Business GLOBAL BUSINESS Global Business is a term which describes topics relating to the operations of companies’ and firms interested in various countries. Global business occurs because no single country has the resources to produce everything well. Different countries specialize in different goods and they trade with the other countries that do not specialize in those respective items. The basic principle of international or global business/ trading is that countries benefit because each country has comparative advantage in the long run. There are many benefits for global business; for example, credibility and discipline. In the business market there is so much competition that companies sell outside the country to increase their sales. Increasing globalization of business is requiring managers to have a global business perspective and an understanding of the differences in the environmental forces of the markets in which they operate. The global integration of markets of various products is altering the structure of many industries. Companies have become more specialized in their production and national industries have become more concentrated. Although the effects of economic integration are well known, how changing market structures are impacting upon the competitive behavior and strategic decision-making of firms is less well known. The Characteristics of three different market strategies used by aggressive foreign competitors is established by Donald Feaver. The paper also considers how domestic firms might respond to the import competition under different conditions. An empirical model investigating the three import strategies is presented that seeks to identify distinguishing characteristics of the aggressive market entry strategies. The identification of key characteristics provides useful insight into how the domestic firm may best respond to either defend market share or maintain profitability. (Feaver, D. 2010). The model proves to be a great help in understanding a very crucial role of changing markets globally as markets keep on changing drastically every minute in the global business circumference. The business world has always relied on contractual agreements while conducting businesses. These contracts are very important as it contains a seal or sign of the business partner. But there are instances when the contracts are not fulfilled instead are nullified. The world of business ethics is an old discipline in most parts of the world, and in most of the cases, it is applied to the everyday business world. Business ethics is a multi-faceted approach to honesty, integrity and straight-forwardness in the cooperative world. When business is done globally, business ethics play a crucial role as a business entrepreneur not only represents himself globally but also reflects this country of origin and residence. Hence, erroneous business terms or breaking of any ethics can prove to be a negative point in the global business world. The concept of the dark side of entrepreneurship was introduced by de Vries (1985). While entrepreneurship is normally considered as something positive, Petter Gottschalk in his paper considers the dark sides of it. His conceptual research paper applies entrepreneurship literature to generate new insights into entrepreneurship in organized crime and entrepreneurs in criminal organizations. Entrepreneurial opportunities can be exploited in a variety of ways, depending on strategy and available resources. As organized crime is growing locally as well as globally, law enforcement agencies need to develop their understanding of strategic criminal entrepreneurship. Based on this perspective, the darker side of entrepreneurship needs to be further explored within the business sector in the global perspective in future research. Petter Gottschalk in his paper has concluded that innovation and learning can be found in both legal and illegal enterprises. A learning organization is one that changes as a result of its experiences. Under the best of circumstances, these changes result in performance improvements. Most of the entrepreneurship literature seems to engage in a positive enthusiasm about the role of the entrepreneur. There is a need to take a neutral look at how some entrepreneurs engage in illegal business and how entrepreneurship is not always a wholesome and clean endeavor. The paper made a contribution by linking entrepreneurship to organized crime and by revealing criminal aspects of entrepreneurial endeavor. It illustrated the premise that criminal enterprises can be viewed as entrepreneurial ventures (Gottschalk, P. 2010). I think that an entrepreneur should be alert in choosing his options for business partners. A learning organization and entrepreneur is one that improves as a result of its or his experiences. Gosttschalk has written a well executed paper regarding this issue. Several studies of international business have indicated that internationalization of the firms is a process in which the firms gradually increase their international involvement. It seems reasonable to assume that, within the frame of economic and business factors, the characteristics of this process influence the pattern and pace of internationalization of firms. There are numerous examples of firms which have started international operations without success. The importance of the experience factor is often overlooked. A particular model indicates how it is related to other internationalization variables thus giving a better base for planning and executing the internationalization process. The model focuses on the gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign markets. An evaluation of a Swedish export stimulation program showed that the "export stimulation measures affect firms' export behavior in different ways due to differences in their degrees of previous export experience" (Olson, 1975). Our model indicates how such experience can be expected to affect the export behavior. It also makes it possible to develop a better understanding of foreign investment behavior. “We hope that the model will contribute to conceptualization in the field of internationalization of the firm and thus increase understanding of the development of international operations as described in the empirical studies”. (J, Johanson and JE,Vahlne, 1977). The model is helpful in a sense that it throws light on the basic concept of globalization of trade. Plus it also focuses on the various industrialization variables to consider while conducting global business. Global business on a whole is being continually affected by the recession which started in the year 2007. Shoham in a special issue, has written an article related to the recession being encountered. His special issue is dedicated to the global crisis that started in early 2007. A brief review of the history of the crisis is given; the first signals of genuine economic instability began to appear in the first half of 2007, when a large wave of subprime mortgage lenders in the United States became insolvent. The unstable economic environment of 2007 emerged into a global crisis in 2008. The global economic and financial crisis that started in 2007 is the most severe downturn in the business cycle in the last seven decades. The impact of the crisis is felt probably in all the academic fields related to business administration; finance, economics, international trade, corporate governance, strategy, developed markets, and emerging markets. Amir Shoham in his special issue mentions that Campello, Graham, and Harvey (2010) surveyed 1,050 chief financial officers in the United States, Europe, and Asia to directly assess whether firms were credit-constrained during the global financial crisis of 2008. They studied how corporate spending plans differed in light of the survey-based measure of financial constraint, and found that the average, constrained firm in the United States planned to dramatically reduce employment (by 11%), technology spending (by 22%), capital investment (by 9%), marketing expenditures (by 33%), and dividend payments (by 14%) in 2009. Similar patterns were found in Europe and Asia. Shoham found that “In the current crisis, new unregulated, or lightly regulated, financial entities played a much larger role in the financial system, undoubtedly enhancing stability against some kinds of shocks, but possibly increasing vulnerabilities against others”. (Shoham, A. 2011) Shoham’s article throws a great insight on understanding the sources of the crisis and its impact can teach us much about how to manage these crises in the future and moreover to avoid them altogether as it has affected global business immensely. In conclusion, the articles that I have studied were all helpful from various aspects; article by Amir Shoham presented the latest crisis and the need to avoid it in the future so that it does not affect global business, on the contrary, articles by Johanson and Feaver discussed about the integration of firms in the foreign market (a very important aspect of global business) and how changing market structures are impacted with competitive behavior and decision making on firms respectively. Similarly, Gottschalk explained a whole new aspect of entrepreneurship and how entrepreneurs engage in illegal markets strategically. WORKS CITED: Feaver, D. (2010). Aggressive Fringe Competition and International Trade.  International Journal of International Management. De Vries, M.F.R.K. (1985). The dark side of entrepreneurship’. Harvard Business Review, November–December, pp.160–167. Gottschalk, P. (2010). Criminal Entrepreneurial Behavior. J. International Business and Entrepreneurship Development, 5:1 Olson, H. C (1975). Studies in Export Promotion. Attempts to Evaluate Export Stimulation Measures for the Swedish Textile and Clothing Industries. Uppsala. J, Johanson and JE, Vahlne (1977). Internationalization process of firm - model of knowledge development and increasing foreign market commitments. Journal of International Business studies, 8(1) Campello,M., Graham, J.R. and Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of Financial Economics, 97, 470–48 Shoham, A. (2011). The global recession issue: Introduction—Part I. Thunderbird International Business Review, 53:2 Read More