Role of International Business in a Globally Integrated World Essay

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Global Mergers and Acquisitions

The Challenges of Doing Business Globally

The Role of International in a Globally Integrated World

Business today moves in a globally integrated world. From corporate executive leadership, business support staff, to product production, marketing, and distribution, the business plan must incorporate the concept of a globally integrated business world. This means, too, that businesses today must play a role in the globally integrated role. That role is multifaceted: economic, social, political, and, importantly, technologically innovative. The multifaceted role of business creates new business challenges, and they are challenges that are not always easily overcome.

The world is a culturally diverse place, and it cannot be perceived from a business perspective in terms of Western traditions alone. Indeed, to do so would be a miscalculation of judgment on a global scale. People from non-western nations have unique and distinct cultures that are very different from western life and culture. It is good business practice, and tangential to the success of business in a global environment, to understand and to respect foreign cultures. Grein and Gould (2007) say that the key element in establishing global business success is a voluntary code of ethics, which should be reciprocal in establishing business relationships. Two key elements, they say, is "group membership salience which recognizes local identity factors and globally integrated marketing communications which deals with how firms global/local messages (289)." This means that the Western businesses must be accepting of the fact that in Japan, there still exist traditions such as removing one's shoes before entering a home. In India, there continues to be a caste system, and, in the Middle East, religion dominates every aspect of life for Muslims.

The message Grein and Gould are talking about is how we communicate with one another in business, and how businesses present themselves in a way that is reflective of the global environment. Even though many people in Africa and the Middle East continue to live in simplicity and ways that we are not accustomed to, many people in remote areas have satellite dishes, cell phones, televisions, and other conveniences that keep them in touch with the rest of the world.

Peter Elliott and Tim Devine, writing for the Financial Times (2009) remind us that "We are at a tipping point in the evolution of new ways of doing business. Today's integrated and interconnected world is fundamentally changing the relationship between businesses and their customers (found online at http://www.ft.com/cms/s/0/4f043b02-d06e-11de-af9c-00144feabdc0.html)." Elliott and Devine limit the scope of their discussion to technology, and the role in plays in business and in the lives of consumers the world round. Consumers want technology to connect to business and to the world around them, but, as Elliott and Devine point out, technology, while it has opened up markets to businesses, also presents challenges to businesses. The music industry, they remind us, is one industry that has experienced the loss of profit and copyright through technology while at the same time expanding their markets on a global scale. This takes us back to the points made by Grein and Gould: that there is a need for a voluntary code of ethics in businesses that operate globally, but more importantly, there is a need for governments around the world to support trade agreements that protect patents, copyright, and intellectual property as well as personal information and data.

Global Mergers and Acquisitions

Mergers and acquisitions have long been the foundation of business growth. In today's world of global markets and economy, mergers and acquisitions (M&A) have been transacted with values as high as $100 million per deal (Fay, Hansen, 2000, found online at http://www.allbusiness.com/finance/597296-1.html). Many of those mergers and acquisitions have been initiated from within the U.S., including the 2000 deal wherein Chase Manhattan Corporation purchased Robert Fleming Goldings, Ltd., a UK-based merchant bank for 7.7 billion dollars (Hansen, online). Recent developments, beginning in 2008, have lead to the precarious positions of bank and financial institutions the world round, especially in the United States and in the UK. While much of the public's attention has been diverted from the banking practices, including mergers and acquisitions, to excessive CEO bonuses and salaries, it gives rise to the question of the extent to which confidence can be put in the CEOs who make decisions worth 7.7 billion dollars, putting at risk investor savings and retirement funds.

If we are truly going to engage in a global business market with an eye towards success, investors must be protected by sound business practices and decision making. This is what executive leadership in banking and financial institutions owe their investors. We have seen, perhaps too often, the consequences when investors lose confidence in the market and withhold and withdraw investment dollars. Creating an environment of trust between business and the investor segment is crucial to creating and sustaining a global economy.

The Challenges of Doing Business Globally

Certainly the music industry has taught us many valuable lessons about the global market: through technology, it is possible for competitors and individuals to impact the industry and organization's profit through product theft, copyright infringement, and fraud. We have seen how technology can be used to someone's, or their how someone in the United States is swindled out of their life savings by someone as far away as Nigeria; and that the victim of the fraud or theft is left with few or even no alternatives for legal recourse to recoup their losses. While we need technology to create broader business opportunities, we must likewise develop technology that helps to ensure the protection of customers and of those who use the technology. This must be a primary goal for businesses in the near future, because without the confidence that technology will not bring about consequences that will erode the consumer base, all is for naught.

There are challenges, too, from the business planning perspective. Companies going global must make the decision of branding on a global or local scale (Knowledge @ Wharton, 2004, found online at http://knowledge.wharton.upenn.edu/articlepdf/1067.pdf?CFID=15868938&CFTOKEN=47239991&jsessionid=a830d50b1d3e38e66860442b7525557d5923). This means, like Grein and Gould encourage, that business have to consider whether they will target the needs and desires and identity of the local market, or if they will go with a global brand (5 of 6). Wharton marketing professor David J. Reibstein says this is not a yes or no question, but a business decision that establishes how the business wants to do business in on a global scale (5 of 6). Reibstein offers Cannon as an example:

"The camera is marketed as an introduction to digital in the U.S., as a replacement camera in Japan, and is geared to the high tech community in Germany. 'Global name, yes, he said. Global brand, not really (5 of 6).'"

In other words, Cannon made the business decision to go with a global name, rather than a brand that identifies with the local consumer's culture and geographical location. This decision could leave Cannon vulnerable to the consumer groups that would be more apt to purchase a camera product that is more locally targeted on the basis of language, consumer needs, and market size (5 of 6). The decision leaves room for competitors to impact Cannon's business market by branding locally.

One of the opportunities that a global integrated environment affords businesses is growth in foreign markets. It is an opportunity to recognize increased profits by shifting business segments, such as manufacturing, to foreign countries where less expensive labor can be help increase profits. In recent years, we have seen the pitfalls of this opportunity, most notably in shifting manufacturing to China, where there is indeed inexpensive labor, and less restrictive government regulation, especially about environmental concerns. For the toy industry, what must have seemed an ideal opportunity to increase profits went horribly awry when major U.S. toy manufacturers like Fischer Price and Mattel were forced to recall children's toys because of lead-paint hazards (MSNBC, 2007, found online). The recall entailed some 10 million products, including the popular Barbie doll (MSNB, online).

If business is going to manufacture in foreign countries, consumers must have a high level of confidence that the product will comport with the standards of quality and safety that they have long enjoyed in Western countries, where a large segment of business profit emanates. Right now, as businesses strive to avail themselves of the opportunities of manufacturing in foreign countries, there is a high level of distrust of products being produced in those countries as being safe. In recent years, dog food produced in China was also found to be tainted such that it caused pets to fall sick, and even die from the food. In countries like America, where domestic pets are well loved and treated as members of families, the loss of confidence in pet food manufacturers who produced food in China fell drastically, causing consumers to purchase American made pet food products. If businesses cannot guarantee product quality and safety, the very goal of manufacturing and producing goods in a foreign country becomes null with… [END OF PREVIEW] . . . READ MORE

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