International Business Essay Example | Topics and Well Written Essays - 2000 words - 2

International Business - Essay Example This study deals with the in-depth analysis of a variety of international environmental influences and impact of uncertainties on international business. This paper includes critical analysis of the motivating factors for MNEs to invest in abroad, critical arguments on protectionism, international trade and its benefits for a country, contribution of MNEs and markets in international trade and investment, conflicts between interest of MNEs and host nations. These are main constituent of the paper and analysis on discussion will be made on these areas of international business. MNEs and why the invest abroad Multinational Enterprises are the large business entity that has business activities or registered in multiple countries as business entity in more than one country. The international traders are not multinational entrepreneurs because the main criteria to categorise as MNE is that a firm need to both produce and sell goods and services in more than one country whereas internation al traders generally involved in export and import of goods and services. Multinational enterprises are the main constituents of worldwide globalization. Emerging trend of internalisation of leading domestic business businesses of many countries lead to more foreign direct investment. Internationalisation of firm was initiated by leading businesses of developed countries and they started diversifying into emerging countries in search of more resources and potential markets. Leading businesses of many countries are willing to invest to in foreign markets after saturated penetration in the foreign markets. There are several motivations behind foreign direct investment by the businesses. These motives can be categorised as traditional motivations and emerging motivations. Traditional motivations include the forces that has been drove the leading business to divest into foreign markets. There are four major traditional motives behind foreign direct investment by the companies. Market se eking Business always finds potential market to enjoy demand of their product and services. Therefore, once a business saturated in a particular region or a domestic country then it started finding potential market in the foreign countries. This is one of the most efficient strategies of business expansion as well as sustains increasing demand of product and services. Another reason of market seeking may be that specific product or services requires specific markets for getting appropriate demand or value of the product. Many companies seek foreign markets in this motive. Resource seeking Resource is next most important factor for a business. All businesses try to find out bets resources in low cost and this is the reasons behind major diversifications of the leading firms of developed markets. FDI helps the company to identify and develop production unit in the foreign markets with major availability of resources. Major seeking resources are raw material for product companies and m anpower for service based companies. Strategic asset seeking Another important motive of companies behind foreign investment is to invest in potential foreign businesses to build strategic assets. This may involve in partnership establishment with the existing foreign firms. This is one of t5he most efficient and popular diversification strategy of MNCs. Efficiency seeking Multinational corporations always want to reorganize or restructure their asset holding in overseas markets. The motive behinds this is to efficiently respond to macroeconomic changes that have