This article has multiple issues. It involves cross-border transactions of goods and services between two or more countries. Transactions of economic resources include capital, skills, and people for the purpose of the international production of physical goods and services such as finance, banking, international business management pdf, and construction.
Globalization refers to the international trade between countries, which in turn refers to the tendency of international trade, investments, information technology and outsourced manufacturing to weave the economies of diverse countries together. To conduct business overseas, multinational companies need to separate national markets into one global marketplace. In essence there are two macro factors that underline the trend of greater globalization. The first macro-factor consists of eliminating barriers to make cross-border trade easier, such as the free flow of goods and services, and capital. The second macro-factor is technological change, particularly developments in communication, information processing, and transportation technologies. International business” is also defined as the study of the internationalization process of multinational enterprises. Some consumer-electronics producers such as Samsung, LG and Sony, and energy companies such as Exxon Mobil, and British Petroleum.
Each of these factors may require changes in how companies operate from one country to the next. Each factor makes a difference and a connection. Throughout his academic life, he developed theories that sought to explain foreign direct investment and why firms become multinational. There were three phases according to Hymer’s work. The first phase of Hymer’s work was his dissertation in 1960 called the International Operations of National Firms.
In this thesis, the author departs from neoclassical theory and opens up a new area of international production. At first, Hymer started analyzing neoclassical theory and the financial investment, where the main reason for capital movement is the difference in interest rates. Then, he started analyzing the characteristics of foreign investment by large companies for production and direct business purposes, calling this Foreign Direct Investment. By analyzing the two types of investments, Hymer distinguished financial investment from direct investment. The main distinguishing feature was control. Portfolio investment is a more passive approach, and the main purpose is financial gain, whereas foreign direct investment a firm has control over the operations abroad.
The first is the firm-specific advantages which are developed at the specific companies home country and, profitably, used in the foreign country. The second determinant is the removal of control where Hymer wrote: “When firms are interconnected, they compete in selling in the same market or one of the firms may sell to the other,” and because of this “it may be profitable to substitute centralized decision-making for decentralized decision-making”. The second phase is his neoclassical article in 1968 that includes a theory of internationalization and explains the direction of growth of the international expansion of firms. In a later stage, Hymer went to a more Marxist approach where he explains that MNC as agents of an international capitalist system causing conflict and contradictions, causing among other inequality and poverty in the world. Hymer is the father of the theory of MNE”, and explains the motivations for companies doing direct business abroad.
Dunning was widely known for his research in economics of international direct investment and the multinational enterprise. His OLI paradigm, in particular, remains as the predominant theoretical contribution to study international business topics. Hymer and Dunning are considered founders of international business as a specialist field of study. The conduct of international operations depends on a company’s objectives and the means with which they carry them out. To accomplish this goal, each firm must develop its individual strategy and approach to maximize value, lower costs, and increase profits. All of these activities must be managed effectively and be consistent with the firm strategy. For a firm to be successful, the firm’s strategy must be consistent with the environment in which the firm operates.
Once a firm decides to enter a foreign market, it must decide on a mode of entry. There are six different modes to enter a foreign market, and each mode has pros and cons that are associated with it. The firm must decide which mode is most appropriately aligned with the company’s goals and objectives. Exporting is manufacturing the product in a centralized location and exporting it to other national markets. In this way, the firm may realize a substantial scale of economies from its global sales revenue. As an example, many Japanese automakers made inroads into the U.