This is a solution of Trading And Globalisation Assignment Help in which we discuss Trading internationally and moving towards the globalisation.
Trading internationally and moving towards the globalisation has taken a drastic form in every organisation as it provides an opportunity to attain growth overseas. The organisations are facilitated with a widespread platform to get connected with the global economy and getting the objectives achieved. The present essay would be depicting the factors that lead to the international trade and globalisation. It also reveals the different methods which help in entering the markets internationally. Furthermore, the essay would also be identifying the advantages and disadvantages of these market entries.
It has been found that there is an immense growth over the platform of international trade and is the basic ground of having globalisation. There are several factors which directs towards the international trade and Business globalisation. Some of them are:
Relaxation or removal of trade barriers
The trade barriers are the most significant obstacles for any of the organisation planning to trade across the boundaries. The trade agreements ensure the flow of goods and services from one country to another and making them successfully exchanged over them. There are several policies which have been withdrawn to motivate the international trade . The organisations are not bound to have any of the messy contracts or legislations and thus with just normal formalities could move towards the boundaries (Yarbrough and Yarbrough, 2014).
Enhancement in internet sources
In the recent times the internet usage has attained a massive growth and thus leads to e-commerce making the enterprises contend in the global marketing easily. The technological aspect is also a factor which motivates the organisation move towards these trades. The internet service facilitates to avail the 24*7 services and make the customers from the entire world to purchase the goods and services online round the clock (McGovern, 2015). This assists the organisation in having a low cost marketing at global levels so that even the small level enterprises could also serve the customers with its offerings.
Means of transportation
With the development in technology the means of transportation have also been developed and the distribution of goods and services all over the world. The transportation like cargos that carries out the products from one place to another also helps the organisation to exchange their services over the global trades. The improvements in these means of transportation had also resulted in the trades at international levels.
Cost of resources and labour
Every country attains a different parameter of cost of labour and the resources and thus it is another reason that the organisations tends to move towards the trade across the nations. Outsourcing and multiplicity had achieved a remarkable position as the business in the recent environment. These initiatives had lead to perform well in competitive and financial aspect both at the international levels (Johnson, 2013). The organisation easily finds the required labour at cheap costs and is also able to arrange the resources conveniently. There are many other factors that promote the international trade and globalisation like economies of scale, competitive advantage, specialisation, enhanced exposure, etc. These factors support a business organisation in having more expansion and attain growth in both domestic and international market.The factors being discussed above impacted the businesses of McDonalds and Apple globally. McDonalds is a leading brand which entirely depends on the marketing and branding strategies. While, Apple is a well known multinational technological brand which concentrates on marketing and branding and also on the external factors of the globe. Both the organisations are been considered as the most successful organisation in terms of international trade. It had become essential for the organisation to make use of trade agreements internationally, online sources for marketing, technological aspects, environmental channels and the other means of distribution for the products and services so that could expand its business operations (Ramamurti, 2012). The organisation acquires an opportunity to perform a venture into diversified markets all over the world. With respect to the global perspectives, the businesses acquire an immense competitive element, specialisation and the economies of scale and other financial aspects. These factors also facilitate the business organisations to attain the essential resources and pull the customers towards them. It also has a major impact in having a large customer segment in the global market.The stakeholders in both the companies include the customers, employees and the shareholders. The employees are the bases for the functionalities of these organisations and assist them through technical and professional services. Though, the human resource department of these organisations includes activities to motivate multiculturalism and diversity to attain globalisation over the business operations. Most of the companies being employed in international trades assimilate the diversity and the multiculturalism with the purpose to acquire skill, ideas and knowledge from the employees and increases the levels of profitability (Czinkota and Ronkainen, 2012).With respect to the businesses, EU or European Union has a major role in globalisation and international trade. McDonalds has expanded its operations in many of the countries and had huge opportunities. EU had removed the trade barriers for the organisations facing issues in international trades. It diminishes the cost and enhances the efficiencies at each level of operations. Along with this, the stakeholders are also been benefited with EU as it provides a range of services to the member companies. The employees are been provided with special perquisites and attains significant level of profit sharing into the organisation. There are different ways by which businesses trade their products and services in international market (Wild.et.al, 2014). There are various methods and ways which are helpful for the organization to enter in international market and they are as follows:
Licensing is considered as less risky method of market entry for the organization. It includes contract manufacturing, franchising and turnkey contracts. In this technique the licensor will grant the company in the international market to sell their products and establish a new brand name and this method is minimize investment cost and also risks (Milgrim and Bensen, 2014). For example, McDonald’s has the license to sell their products in international market.
It is a term which defines a complete range of various relationships among different organizations which market their products internationally. Also, sometimes their relationships are also with their competitors. For example, Apple has distribution alliances for their iPhones which are initially marketed in UK and McDonald’s has different marketing agreements and also research and development arrangements for international marketing.
Joint ventures (JV)
Joint ventures are being inclined to equity based in which a new organization is establish the business with new parties and owing an amount of the new business. In this method, two or more companies may come together to make an organization to manage in their home nation and both the companies are share the profit and risk that are associated in this method (Klotz and Bolino, 2013). Both the organizations may share expertise and knowledge which is helpful for them to assist in improvement of the business. For example, if McDonalds wishing to enter China then it requires to source local business partners of China.
Foreign direct investment
FDI is considered as the direct rights of facilities in the targeted nation. It includes transportation of resources which involves technology, capital and personnel. Direct foreign investment may be made by the achievement of a current entity or the founding of a new business. Direct ownership gives a high amount of control in the functions and the capability to better understand about their customers and rivalry environment. Nevertheless, it needs a high degree of commitment and high level resources. For example, McDonalds has appropriate personnel, technology and capital to invest in FDI.
Advantages of different methods of international market entry
For entering into international market both McDonalds and Apple could use joint-venture and merger strategy that have following advantages:
- By using both strategies organization could reduces the cost of developing infrastructure and arrangement of resources that required for expanding business in potential market (Jormanainen and Koveshnikov, 2012).
- For a company such as Apple and McDonald, licensing and contracting saves the company the cost of shipping or exporting their brands to the foreign market. Merger will help to enter into international market.
- Use of joint-venture and merger will help to overcome the risk like customer analysis, human resources and utilization of resources.
- Lack of control is a major disadvantage for the exporting entry strategy. For instance, indirect export of brands makes some major consequences like services tax, pooling of resources and follow up of local rules and regulations. Moreover, both organizations will be under the control of overseas agents (Milgrim and Bensen, 2014).
- The cost involved in signing documents such as agreement and policing in the licensing entry method is very high. The franchise operation of McDonald is a good example whereby cost becomes a major overhead cost.
It had been concluded that trading on the international platform covers a wide range of elements and benefits to the organisation in making its operations global. There are many of the factors which motivates the organisation to move their business activities at global factors. With this it had been found that there are various methods of entering the international market and acquire more profitability and expansion.
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Books and journals:
Yarbrough, B.V. and Yarbrough, R.M., (2014). Cooperation and governance in international trade: The strategic organizational approach. Princeton University Press.
McGovern, E., (2015). International trade regulation, Globefield Press, Vol. 2
Johnson, H.G., (2013). International Trade and Economic Growth (Collected Works of Harry Johnson): Studies in Pure Theory. Routledge.
Ramamurti, R., (2012). What is really different about emerging market multinationals?. Global Strategy Journal, 2(1), pp.41-47.
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