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International business relates to any situation where the production or distribution of goods or
services crosses country borders. Globalizationthe shift toward a more interdependent and
integrated global economycreates greater opportunities for international business. Such
globalization can take place in terms of markets, where trade barriers are falling and buyer
preferences are changing. It can also be seen in terms of production, where a company can
source goods and services easily from other countries. Some managers consider the definition of
international business to relate purely to business, as suggested in the Google case. However, a
broader definition of international business may serve you better both personally and
professionally in a world that has moved beyond simple industrial production. International
business encompasses a full range of cross-border exchanges of goods, services, or resources
between two or more nations. These exchanges can go beyond the exchange of money for
physical goods to include international transfers of other resources, such as people, intellectual
property (e.g., patents, copyrights, brand trademarks, and data), and contractual assets or
liabilities (e.g., the right to use some foreign asset, provide some future service to foreign
customers, or execute a complex financial instrument). The entities involved in international
business range from large multinational firms with thousands of employees doing business in
many countries around the world to a small one-person company acting as an importer or
exporter. This broader definition of international business also encompasses for-profit bordercrossing transactions as well as transactions motivated by nonfinancial gains (e.g., triple bottom
line, corporate social responsibility, and political favor) that affect a businesss future.

Globalization is one of the most important factors in today's business. A global perspective is
consider a matter of survival for business. This new field is a blend of strategic management and
international business that develops worldwide strategies for global corporations. Strategic
management is the process of specifying an organization's objectives, developing policies and plans
to achieve these objectives, and allocating resources so as to implement the plans. Additionally,
global strategic management includes acknowledging and handling the challenges of going global.
Global competition has become an important part of todays business activity and demands a new
way of thinking that incorporates strategic management. However, there are many unique strategic
resource management challenges associated with going global. It is important to develop an
international business strategy to deal with a rapidly developing global economy. In this paper I will
address the advantages of international expansion as well as identify the challenges associated with
expanding from the US to Mexico, France and Turkey.
Strategic Management and Entrepreneurship
A knowledge of both strategic management and entrepreneurship will enhance your understanding of
international business. Strategic managementis the body of knowledge that answers questions about
the development and implementation of good strategies and is mainly concerned with the
determinants of firm performance. A strategy, in turn, is the central, integrated, and externally
oriented concept of how an organization will achieve its performance objectives.


One of the basic

tools of strategy is a SWOT (strengths, weaknesses, opportunities, threats) assessment. The SWOT
tool helps you take stock of an organizations internal characteristicsits strengths and weaknesses
to formulate an action plan that builds on what it does well while overcoming or working around
weaknesses. Similarly, the external part of SWOTthe opportunities and threatshelps you assess
those environmental conditions that favor or threaten the organizations strategy. Because strategic
management is concerned with organizational performancebe that social, environmental, or
economicyour understanding of a companys SWOT will help you better assess how international
business factors should be accounted for in the firms strategy.
Entrepreneurship, in contrast, is defined as the recognition of opportunities (i.e., needs, wants,
problems, and challenges) and the use or creation of resources to implement innovative ideas for

new, thoughtfully planned ventures. An entrepreneur is a person who engages in entrepreneurship.

Entrepreneurship, like strategic management, will help you to think about the opportunities available
when you connect new ideas with new markets. For instance, given Googles current global
presence, its difficult to imagine that the company started out slightly more than a decade ago as the
entrepreneurial venture of two college students. Google was founded by Larry Page and Sergey Brin,
students at Stanford University. It was first incorporated as a privately held company on September
4, 1998. Increasingly, as the Google case study demonstrates, international businesses have an
opportunity to create positive social, environmental, and economic values across borders. An
entrepreneurial perspective will serve you well in this regard.
Large businesses have certain inherent advantages over smaller companies. They are usually more
established and have greater amounts of funds and resources. Larger companies also have more
es,tablished customers. Hence, they can enjoy more repeat business, which produces higher sales
and profits. There are also several other key advantages of owning a large business. Small-business
owners can study the benefits of larger firms to determine the optimal size for their organizations.
Stronger Brand Recognition
Larger companies usually enjoy stronger brand recognition or awareness versus smaller ones. Brand
recognition pertains to the percentage of people aware of a company's brand name and products.
Most large companies start out as smaller organizations. They build their brand recognition through
personal selling, advertising and public relations. An advantage of having stronger brand recognition
is that customers will usually think of those companies first when making purchase decisions.
Hence, companies with greater brand awareness generally sell more products in the marketplace.
Greater Human Resources
Larger companies usually have greater numbers of employees or human resources. This allows them
to pool their resources to accomplish more work. They also typically have taller organizational
structures. For example, these firms will often group their organizations by various functions,
including marketing, finance, engineering and information technology. Vice presidents will oversee
directors, managers and analysts. Larger companies, in turn, have greater amounts of talent within

these separate departments. Work can then be done more efficiently and with greater amounts of
Economy of Scale
Another advantage of having a larger company is economy of scale. Suppliers often provide price
breaks for businesses, wholesalers and retailers that can buy products in higher quantities. For
example, a manufacturer may sell widgets for $1 per unit. The unit cost may be reduced to 90 cents
for orders over 100, and 75 cents for orders over 250. Larger wholesalers usually have more
financial resources to take advantage of these price breaks. On the flip side, they can set their prices
lower than smaller companies to earn comparable profit margins. The same holds true for companies
that manufacture products. They have the wherewithal to produce larger quantities of products at
lower unit costs.
Higher Compensation Packages
Large companies also can afford to offer workers higher salaries and better benefit packages. They
may wield these advantages to attract the most-talented employees in the workforce. Contrarily,
smaller firms may have limited resources when hiring new workers. Profits may be too limited to
match the salaries of the larger companies.

Sometimes called a small business, a small-scale enterprise is a business that employs a small
number of workers and does not have a high volume of sales. Such enterprises are generally
privately owned and operated sole proprietorships, corporations or partnerships. The legal definition
of a small-scale enterprise varies by industry and country
The U.S. Small Business Administration states that small-scale enterprises generally have fewer than
500 employees within a 12-month period in non-manufacturing industries. A company must consider
any individual on its payroll as an employee. In Australia, however, a small-scale enterprise is one
that has fewer than 15 employees on payroll, as defined by the Fair Work Act. The Small Business

Act for Europe states that small enterprises are those that have 250 employees or less. Small-scale
enterprises in Asian countries generally have 100 or fewer employees, while small-scale African
enterprises hire 50 or fewer workers.
Financial Measures
In some countries, the definition of a small-scale enterprise is bound by financial measures such as
net profits, balance sheet totals, the value of assets and annual sales. In the United States, for
example, a non-manufacturing small-scale enterprise is one that does not earn more than $7 million
in a year. Financial measures can vary by industry, as annual receipts may be higher for industries
that have higher overhead costs to operate. In general, small-scale enterprises are businesses that do
not dominate their respective industry.


Below are my reasons:-


There are several advantages that a multinational company (MNC) can benefit from. Those
advantages are described below.

Increasing sales and finding new markets

By expanding operations to an international scale means that business can increase their total
sales by supplying product to multiple companies.
The product may vary in its life cycle in other the companys other countries. It is quite possible
that a mature product in the US is an emerging product in Mexico, France or Turkey. Businesses
can take advantage of expanding the products life cycle. The Product Life Cycle is the cycle a
product progresses through from introduction to growth to maturity and finally, to decline. This

cycle is associated with market demand. Many other factors contribute to market demand as
addressed below.
Acquiring New Raw Materials / Resources
An example includes the availability of clay in France versus the availability in Mexico. If the
company manufactures pottery, a plant in Mexico would produce this final product for a less
expensive cost compared to France since the raw material for pottery is readily available in
Business may engage in expanding its operations internationally in order to diversify.
This cushions unpredictable swings in market prices and sales in any one particular market thus
allowing their other markets to support such occurrences. If a business has a range of suppliers
from different countries, then the business is less likely to come under threat from supply
shortages or price increases.
Minimizing Competitive Risk
The operation of a business in many countries means that it is less likely that a competitor will
have a crucial impact on the business operations in one particular market area. Example: if the
company manufactures tennis shoes in all four of its countries, US, Mexico, France, and Turkey,
it has a known presence in these four countries. Therefore, it does not have to compete to get its
product in those countries since it already has a presence.
Gaining Economies of Scale
The business experiences cost savings by increasing the scale or size of its operations. Through
international expansion, businesses obtain a better economies of scale by selling worldwide or
establishing production opportunities in low cost labor localities. Although, other obstacles need
to be considered as mentioned below. Through this increase in the size of the market, the price
per unit of output decreases, allowing for a reduction in price or an increase in profits.

Cushioning the Economic Cycle

If a business has operations in a variety of countries (markets), then it can lessen the impact or
cushion the natural progression of the economic cycle. The economic cycle includes the phases
the economy experiences over an amount of time. The economic cycle moves from a booming
economy - where sales and employment is high to a recession - where sales have declined and
unemployment increases.
Regulatory Differences
Some countries of the word have more lenient stances towards regulations involving
environmental emissions and/or wages for workers. Business may use this to their advantage,
and set up operations where it will cost them less to operate due to the nature of government
regulations in a particular country. However, this can also be an obstacle as listed below.
Minimizing Tax
Taxes in various countries around the world differ. Therefore a business may take advantage of
countries with lower taxation rates, saving on the costs of production.


There are several challenges faced by multinational companies (MNC). Those challenges fall under
the categories of Commercial, Legal, & Regulatory, Market, and Environmental factors and are
discussed in detail below.
Commercial, Legal, & Regulatory (CLR) Factors
Competition Law Addresses how government regulates competition in country.
Some industries government says the more the merrier because the consumer will get a better
product for a better price. On the other hand, certain products do not yield this thought process
like energy. Fewer competitors and greater regulators examples include healthcare, insurance
companies, etc. If insurance companies belly up the government will have to pick up the tab.
What are the barriers of entry? What obstacles will make it difficult for a firm to enter a specific
market? Some countries do not competitors in their markets because the resident market will

suffer eventually putting the locals out of business. A company must understand the competition
of the market they are entering or they could exhaust endless funds figuring it out.
Tax Law tax regulations. Tax law affects every aspect of your business. It
determines whether you buy or lease equipment. Local governments can grant you a tax hiatus or
corporate tax break or use a competitors tax rate. Or a manufacturer could use an existing
facility that closes at night to manufacture their product. This will allow them to produce without
the liability of a plant. This is efficient use of money and capital.
Labor Law - Of course these vary by country. How you pay employees will vary by
job. Categories of employees like Exempt vs Non-exempt and Skilled and Unskilled labor. In
Mexico there are low wage ratings but benefits may cost you more. 70-75% of a companys
expense is dedicated to labor and benefits so knowing the boundaries beforehand is crucial.
Accounting & Financial Regulations In every country accounting and financial
regulations are different. Depreciation/amortization and tangible assets are capitalized
differently. As an example, accounting for laptops vary by country. Some countries allow you to
write down interest some dont. US has FAASB that apply only to US. Europe has their version
of Sarbanes-Oxley named BASEL II.
Regulatory Environment every industry for all foreign market are governed by
regulators. If selling a car regulators exist for the width of windshield. If food, then the
temperature for which it is transported is regulated. 220 countries in this world and there are 220
ways to regulate. As a result, a company is building many different versions of the same
Environmental Regulations some countries do not care about the environment.
They only want cheapest source of energy which is coal. Whereas other countries do not allow
the use of coal because of its pollutants. OSHA may only exist in US by name but there are
governmental agencies exist based on functions. How a company handles its waste products also
effects the bottom line due to disposal fees for the product and/or the packaging for the product
as disposal fees for the cardboard it was shipped in. This determine inputs of cost that will be
passed on to consumers or absorbed by the company.

Market Factors
Availability of Skilled Labor based on the need from the market. If building cars
you need people that can read or that can operate computers. Employees may need to be bilingual depending on the skill set needed for the job skill. Some countries do not have a formal
secondary education system. If this is the case, where do you find the skill set to perform the jobs
needed to produce your product? Some corporations actually develop the skill set of the locals to
build home-grown labor pool. They actually breed the graduates to meet their labor demands.
An example: for every 100 employees you can only have 1 ex-patriot. Ex-patriot (ex meaning
external in Latin) should only be 1% of labor force. Some countries limit the number of external
workforce you can bring in because you will be taking work away from the locals. This ties into
Labor laws which ties to competition law which ties to regulatory environment.
Market Demand/State of Competition consider the market before establishing
existence in country. Do you need to create a demand? Can you change labor, competition or
regulatory laws? Although no market demand will the government create a market demand to
create revenue? what is the local state of competition? Can the company gain market share?
Does it make business sense to make the move?
Macro Economy What is the state of economy is it in a recession or growth stage?
A company does not want to introduce a new product or may want to limit the number of new
products if the state of the economy is poor. Economic forecasters an forecast the economy of the
future for the market the company is considering entering.
Cost of Money (interest rates) what is the cost of money? What are the interest
rates? How have they fluctuated in the recent years? What is the exchange rate?
Corruption Index: Every country has some type of corruption. A company will need
to train its employees to identify corruption and setup financials so not subject to corruption. But
the bottom line is every company will have deal with some degree of corruption.

Environmental Factors
Language Operating in US, Mexico, France, and Turkey demands four native
languages be known. When considering transferring or training local staff this language barrier
must be considered.
Culture It is obvious with operating in four different countries there will be varying
religious beliefs, national holidays, cultural beliefs will have to considered and accommodated.

US: mixing pot with many different religions.

Mexico: Roman Catholic 77%, 6% Protestant, remaining: Other

France: Roman Catholic 83%-88%, Protestant 2%, Jewish 1%, Muslim 5%-10%,
unaffiliated 4%

Turkey: Muslim 99%, remaining: Other

Availability of Raw Materials (inputs): Does the company have to import materials
to build/create their product? If so, this cost will have to be passed on to the consumer.
Physical Infrastructure bridges, roads, harbors, docks, but not limited to
transportations. Also includes hospitals, clinics, grocery stores, and gas stations. Operations and
employees require these resources so they must be considered.
Telecommunications Infrastructure - Limitations in IT advancement due to economy,
equipment, IT readiness will hinder the growth of any corporation. If you are not competitive
technology-wise in your field your are behind the game. Information technology (IT) is a
revolutionary force that will continue to restructure corporations and drive economic growth.
Information technology is the way MNCs communicate across bodies of water and miles of land.
This revolution will wire the global world into a single communication network; the central
nervous system for the business world. However, the gap between information technology of the

haves and have-nots of this world is likely to persist. If the country does not have the
telecommunications infrastructure in place how can a company do business?
Energy Infrastructure What limitations does the country have regarding energy
supply. What resources are needed to generate power to the manufacturing plant and how
efficient is the energy supplied? Will the plant have limitations as a result of the lack or type of
energy supplied?
Trade barriers Are there trade barriers in place? A trade barrier is any government
policy or regulation that restricts international trade. Companys rely heavily on importing and
exporting goods. Knowing the trade barriers will save a company money and improve
Continued Crime and Terrorism More likely to happen outside of the US
disgruntled individuals, groups, and nations may hold a corporation responsible for taking jobs
away from the locals or religious lines crossed. And may result in a variety of crimes and
terrorism against the corporation.

The Difference Between Big Businesses & Small Business

Business Size Basics
A business's size can be measured by the number of employees that work for it or by total sales
within a defined period, but no specific line exists that separates a big business from a small
business. However, the U.S. Small Business Administration, for its purposes, does not consider a
business with more than 500 employees or $7 million in total annual receipts to be a small
Business Legal Structure

A business's legal structure determines how the business is managed, taxed and whether owners
are liable for business debts. Many small companies start as sole proprietorships or partnerships,
which give a sole owner or a group of owners complete control over a company. Owners of sole
proprietorships and partnerships pay income taxes for business profit on their personal income
tax returns and are legally liable for business debts. Large companies are often organized as
corporations that pay taxes separately from the owners. Owners of corporations are shareholders
who vote to appoint executive board members but do not directly manage the business.
Financing describes how a business raises money to fund operations and new projects. New
small businesses typically receive financing from the personal savings of owners, small business
loans from banks, and gifts or loans from friends and family members. Well-established small
businesses and medium-sized companies might be able to attract financing outside investors and
money from venture capital firms. Large corporations can raise money by selling shares of stock
to the public and by selling corporate bonds.
Market Niche
Another difference between small businesses and large companies is that small companies often
focus on a niche market, while larger companies tend to offer more products and services to a
wider variety of consumers. A small company with only a few employees might be able to make
enough money to survive by selling a single product or service in a very specific market. As
companies grow, they tend to branch out into new markets and offer new products and services
to increase sales and hire more employees.

Impact of Globalization on Small Business

The following is a classic story, often used by socialists to highlight the evils of a capitalist
society the small town grocer gets mercilessly taken out by the new Wal-Mart in town. The
small town grocer may have an established customer base and friendly relations with the

community, but it simply cant match the low prices offered by Wal-Mart. Being a large national
company, Wal-Mart has the sprawling global resources and is willing to sacrifice margins to take
out local competitors. In the end, customer loyalty means nothing and the grocer goes bankrupt,
decades of hard work decimated overnight. This is a well-known anecdote referring to the impact
of globalization on small businesses. Once you start up a new business, you plunge into an ocean
populated by a few smaller fish, which compete with you for food, and lots of bigger ones, eager
to eat you alive. The big fish in the sea tend to be well-connected, multinational beasts taking full
advantage of the perks of globalization such as outsourcing, uneven exchange rates, and lowmargin high-volume sales models making them nearly impossible to compete against. What are
the impacts of globalization on the small business owner, and how can you defend yourself from
the blows that will inevitably come your way?
Globalized Brands
In The Communist Manifesto, Karl Marx famously warned that small local businesses will
inevitably be wiped out by large multinational companies in a form of imperialist capitalism.
According to him, the destruction of local businesses leads to the loss of local culture, and the
rise of a singular anonymous corporate culture which only varies slightly from country to
country. Visiting China today, its hard to argue with Marxs words. The urban landscape is
littered with KFCs, Pizza Huts, McDonalds and Starbucks. A trip to a Chinese department store
is virtually identical to one in America, with the same multinational brands Armani, Coach,
Chanel, Gucci lining the halls like an anonymous duty-free airport shop.
However, at a closer glance, todays multinational companies are a far cry from the sinister
imperialists that Marx prophesised. Brands are highly localized to accommodate local tastes, and
companies have forged mutually beneficial relationships with foreign countries to further their
sales. Foreign governments are also quick to kick out offenders who dont play by the rules.
While some small businesses such as the aforementioned local grocer have suffered, there are
those which have avoided being crushed by a large, globalized company. In China, there are still
plenty of successful small restaurants and coffee shops, despite the rise of the American
multinational eateries. How did these restaurants survive? By providing local menu items such
as dumplings, noodles, Peking duck that those chains lack the expertise to make. The lesson for

a small business is simple dont keep making hamburgers when a McDonalds comes to town.
Sell something else.
Exchange Rates and Outsourcing
There was a time, decades ago, that Made in the U.S.A meant well-made products that you
could be patriotically proud of. Today, Made in the U.S.A usually means paying high labor
costs, dealing with labor unions and earning hopelessly tiny profits on slim product margins. It
was due to this that outsourcing or shifting your production base to another country became
attractive. Lower material and labor costs in a country with a weaker currency boosts profits
Small businesses usually dont have the advantage of forging outsourcing partnerships with
overseas factories, and are at a severe disadvantage in pricing. Multinational corporations, such
as Wal-Mart, tend to exploit this business model to the fullest, creating extremely cheap goods in
China, marking them up only slightly and only earning only a slim margin on each product. The
goal of this business model is to use high sales volume to offset its low profit per product. A
more immediate goal is to undercut any local competitors, who are physically unable to match
those low prices due to the lack of an outsourcing infrastructure, and wipe them out with a
pricing war. After all these local competitors have been eliminated, Wal-Mart is free to raise
prices again, since it has established itself as a local monopoly.
As a small business, its nearly impossible to protect yourself from this kind of assault. If you
want to stand your ground and fight, then the best strategy is to ally yourself with other local
businesses and pool your resources. Offer free cross-advertising campaigns and attack the large
multinational threat together. While you cant offer discounts on all your products to fight back,
offering rotating sales on select products can attract customers. In an all-out war against the big
guys, the enemy of your enemy is your best friend.
Stay Defensive
Small businesses often drop like flies when targeted by a multinational corporation with strong
globalized ties. However, forging a strong identity and solid alliances with small competitors can

increase your chances of survival, so that your small business lives to see the day that it matures
into a globalized company.

Global Entrepreneurship Examples

This past decade has proven that businesses that expand to international markets tend
to fare better than purely domestic ones. The most well-known American companies
such Coca-Cola, Nike and McDonalds all have significant overseas footprints. Many
of the products sold in America are also produced overseas. For the 21st century,
countries are inextricably linked to one another in trade, taking advantage of exchange
rates to import and export with maximum profitability. The international market is
currently four times the size of the American one and growing, making it an essential
part of any companys expansion strategy.
Multiple free-trade agreements now exist between global participants that help fuel the
rapid pace of globalized businesses. Organizations such as the WTO and cross-country
agreements such as NAFTA and GATT reduce and eliminate trade barriers and tariffs,
which are seen as detrimental to global corporate growth. Participating countries benefit
from importing goods by acquiring a wider variety of available products, which increases
local competition and in turn improves quality and decreases prices. This ideally
produces a self-sustaining system in which only the best quality products sold at the
lowest price survive, forcing companies to refine their production capabilities repeatedly
to remain competitive. What are some examples of industries that have evolved from
domestic businesses into international powerhouses?
The Tech and Agriculture Industries

The titans of the tech industry are strong examples of successful global
entrepreneurship. Companies such as Microsoft, Apple, Google and Yahoo all evolved
from small startups with limited funding into massive multinational corporations. The
reason for the rapid spread of these companies is that the demand for these
technologies operating systems, search engines, office software and smartphones
is universal in developed nations. Successful tech companies have all been led by
visionary leaders such as Gates, Jobs, Page or Yang who have are able to look a
decade into the future to predict the evolving needs of customers.
Large chemical companies such as Monsanto and DuPont are also successful due
to their ability to cut through the noise of the markets to draft out a long-term business
plan. With the global human population increasing at an unsustainable rate, food
shortages will become a harsh reality in the next few decades. Agricultural companies,
which produce fertilizer and bio-engineered crops, are well positioned across the world
to reap the profits of the growing demand of farmers who are increasingly required to
maximize their productivity.
Other Industries
Other industries, such as fast food restaurants, apparel retailers and miners have all
found success in international markets. The two characteristics that these all share are
universal demand and long-term business forecasts. Businesses that are well
positioned for growth will offer detailed calculations of the anticipated growth in demand
for its target market. Common target countries and considerations include China, Latin
America and developing third world nations, which lack infrastructure but are rich in
natural resources. Consult the most recent International Trade Statistics Yearbook of the
United States to find the code of your product or service, to determine the hottest global
growth areas for your company.
Global Etiquette
When doing business with other countries, modern technology is your best friend.
Technologies such as e-mail, Facebook, Twitter and Skype make it much easier to

conduct international business with just a computer with an Internet connection. The
Internet makes it much easier to build a network of contacts quickly, who can help you
start to establish a presence in the target country. Touching base with a local team can
help you understand the current market conditions in the country, the demand for your
product or service, as well as the business culture. Doing business in Japan differs
greatly from Europe or the Middle East, so localizing your product and your attitude can
increase your chances of success. Entering a country via a joint venture or franchise
may decrease your risk exposure while allowing you to gauge your probability of

Our world is becoming integrated into a connected community known as a global economy,
driving a competitive need for multinational corporations (MNC). The challenges faced by
MNCs as outlined in this paper prove to be barriers. However, these are obstacles that are
conquered by companies such as Coca-Cola, McDonalds, and other well-known corporations
all of which are profitable. Strategic management plays a roles in their successes. It integrates the
knowledge and experience needed to allow companies to make business decisions for all
functional areas; near or far. REFERENCES
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Chan, S. (2002). People Management in the Context of Global Change. Employment Relations
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Morales, D.A. (2010, February 27). Senior Vice President of Sales, BT Global Services. Telephone