What are three factors that have led to the increased growth in international business in recent decades? Which do you think has been most important and why?
Answer:
a. Rapid increase in an expansion of technology—By increasing the demand for new products and services, technology has tremendous impact on international business. As the demand increases, so do the number of international business transactions. Improved communications and transportation speed up interactions and improve managers' ability to control foreign operations.
b. Liberalization of cross-border movements—Although the past decrease in restrictions has been erratic, governments have lowered barriers because their citizens have expressed the desire for better access to a greater variety of goods and services at lower prices. Governments also reason that their domestic producers will become more efficient as a result of foreign competition, and they hope to induce other countries to reduce their barriers to international movements.
c. Increase in global competition—The pressures of increased foreign competition can persuade a company to expand its business into international markets. Today companies can respond rapidly to many foreign sales opportunities. They can shift production quickly among countries if they're experienced in foreign markets and because they can transport goods efficiently from most places.
d. Growing consumer pressures—Consumers are savvier and have more income. They want to be able to buy the variety and low-cost products available from anywhere in the world.
e. Development of supporting services—Companies and governments have developed services that ease international business. Today, producers can be paid relatively easily for goods and services sold abroad because of bank credit agreements, clearing arrangements that convert one country's currency into another's, and insurance that covers damage en route and nonpayment by the buyer.
f. Changing political situations—The schism between communist and noncommunist countries is basically over, as communist countries have moved toward transitioning their economies; therefore, trade between these countries has increased.
g. Expanded cross-national cooperation—Countries realize they can't go it alone. They cooperate to gain reciprocal advantages, to attack problems jointly, and to deal with areas outside the confines of any country.