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全球化，尽管在国家和国际层面上造成了许多变化，为所有企业制定了新的规则，如果一个企业是成功的，那么它需要知道的一般环境。从目前的贸易和经济环境的变化，使国际企业为了保持自己的竞争力和扩大他们的活动进入新的市场。因此，跨国企业应该记住，国际贸易，作为全球化的结果，现在是利润的主要来源。同时，跨国公司应该重新考虑他们的财务和生产策略，如果他们想获得更多的来自全球的市场环境，如专注于专业化。这篇文章的目的是讨论国际商业的主要方式和国际贸易和专业化的优势和劣势，扩大自由贸易。
People today wake up by an alarm clock made in China, shave with a French razor, dress in Italian-designed (Pakistan-made) clothes and drive their way to work with a German car. Small facts from our daily routine justify that 'the last 100 years the internationalization (some would say globalisation) of business can be said to have re-drafted the world economic map' (Woods, 2001). Globalisation, despite the numerous changes caused at national and international level, set new rules for all enterprises, no mater their size - if a business is to be successful then it needs to be aware of the general environment. From the moment trade and economic environment changed, firms turned international in order to maintain their competitiveness and expand their activity into new markets (Hodgetts, 2003). Therefore, multinational enterprises (MNE's) should keep in mind that international trade, as a result of globalisation, is now the primary profit source. Also, MNE's should re-consider their financial and production tactics if they want to gain more from the global-market environment, such as focus on specialization (ibid).
The purpose of this essay is to discuss the primary ways International Business occurs and examine the advantages and disadvantages of international trade and specialization with an extended look at free trade.
Two Primary Ways of International Business Development 国际商务发展的两种基本途径
The basic idea for firms going global is to expand their existing sales with reducing the costs of making the additional sales. How will they achieve that? They have two primary ways: first, imports-exports worldwide (International Trade) and second, direct foreign investment (FDI) or portfolio investment. The first way is usually seen as Adam Smith's basic principle of exchange, as an attempt to explain why countries trade, while the second way is the base of international capital flow.
International Trade 国际贸易
As mentioned before, firms and countries expect some gains from this exchange such as: lower production costs, improved products quality and higher sales profits. However, in the early years of trade, the theory of mercantilism was against that assumption and it was Smith who reacted to this theory by setting up his absolute advantage theory (Mnieh, 2010).
Mercantilists in the 18th century believed that a country's wealth should be measured by the gold and silver the country possessed, so the more precious metals the country had the richer and more powerful it was. Also, the exports were seen as 'good' because they brought silver/gold, whereas imports were 'bad' because they reduced the amount of gold and silver from the country. Mercantilists wanted to encourage countries to export more than import; therefore, they proposed that exports should be increased and imports decreased by means of tariffs or quotas. As a result, under this theory, only one party could gain from trade (Brewer, 2000). However, mercantilism theory did not explain the basic questions of international trade such as, which goods are exported or imported, in what quantity and by whom (ibid).
Adam Smith addressed these questions, and he produced the theory of absolute advantage. That theory holds that countries who use resources more efficiently can gain more by focusing on the specialization of their most efficient product and importing the goods they produce inefficiently. Consequently, the specialized production of a commodity gives a country an absolute advantage on that product, and the country's resources are focused on the production of the profitable output instead of split up or wasted on other, less profitable, outputs. Absolute advantage, however, can explain only a small part of the world's trade today and does not include any evidence about the determination of trade (Rugman and Collinson, 2006).
In 1819, David Ricardo, based on Smith's work, examined the questions ΄΄What happens when a country can produce all products at an absolute advantage? ΄΄ and ΄΄Would trade still benefit both countries now? ΄΄, so he developed the theory of comparative advantage. According to Ricardo's theory, a country has a comparative advantage in a product when it has a higher degree of superiority in its production, and it has a comparative disadvantage in a product when its degree of superiority is lower, relative to another country. In order to understand that theory completely, we need to introduce the concept of opportunity cost (Woods, 2001).. We assume that a country produces two goods, A and B, so the opportunity cost is the cost related to the amount of good A which must be sacrificed in order to produce one additional unit of good B (Mnieh, 2010). Therefore Ricardo, suggested that a country with an absolute advantage in all lines of production should trade with another country in the product which has the higher opportunity cost in order to gain from the other county's lower opportunity cost.
Foreign Direct Investment 外国直接投资
The second way international business occurs is through equities. According to Collinson (2006), a tactic usually applied by nations and MNEs to gain access to a foreign market is equity funds invested in other nations.
Therefore, a definition used for foreign direct investment (FDI) is the control and ownership of foreign assets. The basic idea for the FDI concept is that corporations find it more beneficial to purchase another foreign company, simply to acquire the company's market share and know-how in the host country. It has to be mentioned that FDI is different from portfolio investment. Foreign portfolio investment is a transfer of capital from one country to another, whereas FDI contains the issue of control and ownership of the activities abroad. Another common tactic of FDI is the union of capital of multiple corporations to a joint venture, in order to purchase together the foreign company aboard (Rugman, 2006).
There is a substantial number of reasons why multinational corporations are interested in expanding their activities and influence in foreign assets. The primary reason is to increase their sales and profits. According to the UN World Investment Report (2006), numerous large multinationals have earned millions of pounds through overseas sales every year since they went abroad. Not only large firms gain benefits from activities abroad but a large number of smaller firms increase their revenues as well. MNEs financial and production activities pay the way for local suppliers to get involved with the multinationals and maybe supply them to other worldwide locations (ibid).
The second reason is the lower costs abroad. Lower labour cost, for example, is a considerable reason for transferring a company's production facilities to a place where labour is much cheaper. In addition to this, MNEs can consider other factors such as materials supply, transportation costs and energy issues, which affect managers decisions to move their activities abroad. Another reason is to enter economic blocs and rapidly growing markets. At this point, we have to mention that the global economical map is different between countries, regions or continents. Some countries have markets that grow more rapidly than others, and many countries are part of international, economical and political, agreements that affect trade, so multinational companies gain a foothold in these markets by investing directly in them (Deresky,2006)..
The final reason for FDI is to gain access to technology and know-how as well as the protection of domestic and foreign markets. In essence, there are examples of multinationals that have saved their own and foreign markets by making investments in these markets and take a strategic advantage due to the high-technology acquirements their investments provide (Piggott and Cook, 2006).
Advantages and Disadvantages of Specialisation
The model of comparative advantage and the theory of absolute advantage are both based on specialisation. Specialization, at production level, occurs when a worker becomes skilled and efficient at a specific task in order to be able to produce more goods or services than other workers. Countries that produce specialised goods could have many advantages.
First, specialisation at international level means that a country will benefit from the trade of specialized goods with other countries. Second, specialisation makes workers to becomes quicker at producing goods or services; consequently, the production per good become cheaper and the production levels are increase. Therefore, a country can be competitive and maintain or expand the wealth it already has (Piggott and Cook, 2006). The third point is the gain of know-how. A country that focuses on the specific production of a good can become an expert and invest in research on that good. Fourth, a country can enhance its reputation. If a country becomes an expert it is possible to increase the quality and reliability of its products, she will create a reputation and the demand of its products will increase (Bingham, Combined Proceedings, 2005, Vol.55). |
