The factors that have led to the increase in international trade are globalization, technology, competition, and demand (Wild and Wild, 2007). Globalization has increased in recent times incredibly barriers between countries have reduced and the need to fulfill demand through imports have increased. Technology has seen development and growth in recent times which acts as a driver for globalization. Technology has reduced geographical gaps between the assets of a company making it easier to manage them and give rise to international business.
Competition between different businesses with the same product or service has given rise to the search of new markets in order to increase market share hence businesses go beyond local markets in to the international arena for more market share. Consumer demand has always increased demand of goods that are not manufactured locally is fulfilled through importing the goods giving rise to international business.
Cultural stability is achieved if the cultural values are well understood by the people belonging to that culture, apart from that if the culture is deeply embedded in the roots of the civilization then it is quite appropriate that cultural stability is achieved.
Cultural stability is also related to success and satisfaction, if a person is satisfied
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Transition actually means in the process of converting from one state to another for example when ice is melting to become water it is in a state of transition. Changing from one state to another, this can also be used for a moving car as it is changing position continuously hence it is in a state of transition/
The factors that can positively affect transition are the willingness to change; the knowledge about the transition procedure is another factor that can positively affect the transition process. Another vital factor that can positively impact transition is the preparation for the transitions process and its planning. Both these factors are very vital for any procedure of transition and should be carefully carried out.
The statement that anything which is legal is unethical is not appropriate because legal is abided by the law and policy of the state or the location but ethics are related to moral and cultural values of a person.
There might be a law that a 15 year old girl cannot be married but in some cultures this law might defy the cultural values and hence be ethical meaning for a person marrying a 15 year old daughter might not be unethical. In the same way smoking a cigarette at a public place might be legal but for a specific person might be unethical. Ethics are more related to the societal or cultural values of a person or a group of people as compared to laws of a country which makes an action legal or illegal.
The NAFTA was the North American Free Trade Agreement. It was actually between North America, Canada and Mexico to remove trade barriers and allow the trading between these countries an added leverage. It is also one of the largest and most strong treaties currently present in the World. The effects of NAFTA have been both positive and negative; it basically helped Mexico in lowering its poverty rates.
NAFTA provided a cushion to Mexican suppliers who were preferred over the suppliers of USA as they were able to provide material at a lower cost to the USA manufacturers negatively impacting the USA suppliers. The effects of NAFTA are quite debatable and there have been different opinions of scholars and researchers, but the important point is that it has helped the three countries in benefiting through trade.
The most important aspects that companies should include in their international plans are the study of the culture of that country, the moral values, and the ethical values of the market they plan to enter. Apart from that they should include a local from the market they want to enter while formulating the plan as this helps them in understanding the new market.
The plan should also include the study of the local and international competition that they might face in the international market they are about to enter (Wild and Wild, 2007). Study of the possible competitors helps the company in formulating a strategy to counter the competition with their own skills. An international plan should also include the plan of the exit strategy in case the company is not able to successfully establish their business in the international market. This helps them in selecting the best possible way to exit the market without many losses.
An export strategy is basically a way to enter an international market where local agents are used to sell your product. The idea is basically to contract a local who would sell your product under your name in his or her country. This is a safe strategy as it does not require much study of the international market a company plans to enter.
It also saves cost of setting up operational units in the international market the company plans to enter. The several steps to establish a successful export strategy is to study the competing products in the international markets and decide up on your marketing strategy in the international market. The company should also sample the product in the international market to check the success of the product before actually exporting it. This method of entering an international market is very safe and requires minimal risk taking.
The decision making can be in two hands when a business is operating in an international market. Either it can be in the hands of people present in the international market or in the hands of people present at the head quarters.
If the first scenario is present than the trade off is that the headquarters of the company does not have its say in the decisions and the company’s higher officials might not feel safe and satisfied with these conditions. In the second scenario the trade off is that the people at the head quarter are less aware of the conditions present in the international markets as the people who are actually there and might take decisions on limited knowledge about the situation.
Wild J. J., Wild K. L. (2007) International Business: The Challenges of Globalization. Prentice Hall