The study of international business
Discussion question 1
The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms.”
This topic can be one that can be argued both ways. Technology has had a tremendous impact on how companies do business. An organization with a web site is able to connect with people all across the world. Understanding this, a company should take the time to both invest and learn advances in technology. This is not solely for large corporations, since if a small business doesn’t take advantage of these strategies, they will be left out of the competition. The days of the paperback phone book are gone. Without information technology, most businesses wouldn’t even exist.
Information technology is infiltrating all aspects of business, both large and small. Without it, a company will not be able to keep up with their competition. On the flip side of this theory however is the fact that information technology is cheap, therefore everyone had access to it. This in turn allows all the competition to have the same edge. This may work for a smaller company that has a good marketing campaign. Larger companies have always been able to succeed in the competitive market due to their ability to gain a foothold in the stock market and obtain funding that a smaller company may not be able to do. The ability to advertise allows these smaller organizations to become more lucrative simply by being recognized. A retail company that is willing to ship their products globally is in a position to increase their sales exponentially.
These smaller companies may also expand once they are recognized as a company that is able to maintain a good service or product across the country or across the world. Rather than shipping their product, they may choose to employ people from a country that buys heir goods or services, thereby increasing availability and allowing those from the host country to be a part of the company. Certain countries, such as India, may provide services at a much lower cost than in the United States, thereby creating a greater profit for the company conducting the business. Starbucks is a prime example of this type of business. Twenty-five years ago, Starbucks was hardly known. They had a small number of stores in the United States. They are now one of the most popular brands in the world, with almost 17,000 stores in 50 countries (Hill, 2012).
Vizio also is a success story for small business. They are a company that produces flat screen televisions, are known worldwide and have less than 100 employees. They outsource most of their engineering, all manufacturing and a great deal of logistics. Because it is able to outsource so much at reduced rates, the company is able to sell at discount retailers. They are also able to sell in volume. This gives the company a competitive edge against other retailers with more overhead (Hill, 2012).
With all of these things taken into consideration, it would appear that small business could benefit from globalization if properly managed.
Prior to taking this class, I would probably have said a similar statement. It can be common for a common person to think of large corporations such as Walmart, Coca-Cola, or Samsung when the term international business is used. However, globalization is becoming more of the normal course of business as we progress through time and technology improves.
A portion of doing business internationally is exporting goods. In the United States, it is not the large companies that do most of the exporting. In fact, about 90 percent of the firms that export goods are small businesses that employ less than 100 people (Hill, 2013). Firms with less than 20 employees represent the fastest growing segment of U.S. exporting companies (Hannaher, 2010). It turns out exporting is a good fit for companies of all sizes. It makes sense, once one begins to explore the benefits of selling goods to international customers. An initial analysis can put in plain view that a company’s number of potential customers will increase dramatically once the decision is made to export. A company can go from the population of the US, to a global population. Another factor is companies can gain a market advantage by selling in a country with less competition than in the United States (Hannaher, 2010). This is especially true in developing countries or countries that are transitioning from a government controlled economy to a market driven economy (Hill, 2013). In those countries, individuals are newly able to make choices about the products they consume. Since competition had been closely regulated, there are fewer existing businesses in place. Companies that are among the first to arrive in a new market segment can enjoy a first mover advantage (Brickley, Smith, & Zimmerman, 2009). Companies can benefit by being the first to build infrastructure and be the first company that people think about when they think about their product.
Another factor that international business is for just about every business is the evolution of the internet. The internet has made international commerce extremely easy and inexpensive (Hill, 2013). Companies can build a website, and be open for business in any country in the world. It is also much more convenient to ship and transport products. In the early 1900s products were transported using trains and ships. It could take several days or weeks to ship a product from Dallas, Texas to Paris, France. Now, packages can travel to just about any destination due to air travel and overnight delivery service.
This point came to mind as I was attending a graduation party this past weekend at an old train station. Inside the train station had a map of the state of Michigan in 1910. What was striking, was the map did not have any highways! The map illustrated many train routes across the state. It was still amazing to think about that 100 years ago the only way people moved around was by train. Therefore, trips had to be well thought out. You lived and worked in your hometown, and that was about it. There was no getting in the car and travel 3 hours to a summer cottage every weekend, and there was not even travel 10 miles away because we happen to like that Costco instead of the local grocery! The same concept is true in international commerce. What was once out of reach, is now much closer, and with improving technology will surely increase international trade.