The global market is dynamic and global, moreover they help to benefit the business organizations to play on international grounds. There are several factors that the managers should remember for the purpose of choosing alternative corporate strategy. Nowadays the modern structure of organization offers more flexibility in the process of decision making. It is because most of the businesses are looking to eliminate the operations which decline the business. For that the organization appoints different teams all around the globe solely responsible for the minimization of exchange risk that will cause the company during the international trade.
RISKS IN OPERATING AN INTERNATIONAL ENVIRONMENT
Finding out the risk factors of the investment climate is a major role which is done before investing. There are several ways to reduce the risks like investing in stocks, foreign securities and mutual funds etc… Loss of profit margin on a diverse foreign exchange may eliminate the benefit of the business overseas. Moreover, some countries consider development firms or multinational companies a threat to the sovereignty of a nation. A large hike in the economy may negatively impact international organizations.
IMPACT OF GLOBALIZATION AND INTERNATIONAL BUSINESS
Globalization is characterized by trade agreements, cross-border capital flows, migration trends, technological spread, and knowledge transfers. For trade agreements, a country must sign bilateral, international, or multilateral agreements with another country, and it must plan to remove or reduce trade barriers between countries. It is important because it will boost trade with other countries.
Globalization has progressed through five phases. The first is social globalization, which is the first dominant trend due to the arrival of several different types of people with our ancestors’ distribution around the globe. Our forefathers developed small, rural, urban, and community life as a result of political globalization, which appears to be the second dominant trend. As a result, political structures will be developed in various parts of the world. The third factor is globalization of culture. Countries with political structures have their own society in terms of spreading emerging technology and cultural aspects across the world. For instance, the English language, religions, and customs. The fourth factor is globalization of the economy. After the revolution in 1757, economic globalization has become increasingly relevant. The fifth factor is globalization as a whole. The rise of integrated globalization is seen as a hallmark of the twenty-first century. Many countries are transitioning from self-sufficient economies to more interconnected and interdependent economies with free trade and financial flows. Economic structures that are more interconnected and interdependent can have many beneficial effects. New products are launched to the market in under a year and provide undeniable benefits to company operations. It is possible for the company to extend its business to the global market, resulting in a positive image and credibility among customers, as well as favorable perceptions of organizations. Globalization has pitfalls or obstacles for businesses who want to grow their market globally. The first effect is political stability, which is a key factor in attracting foreign direct investment and other forms of business activity. As a result, the chances of profiting from a politically unstable nation are reduced. The second effect is bureaucracy, which can make it difficult for multinational companies to conduct business. Currency exchange rate fluctuations are the third factor to consider. The price of one country’s currency in terms of another country’s currency is referred to as currency exchange rates. Exchange rate fluctuations may be a stumbling block to a company’s operations in another market. Furthermore, corruption can stifle business and investment in a foreign country. Representatives from the state administration are requesting funds for a variety of programs. The next step in globalization is for countries to reach an agreement on trade, with the primary goal of lowering tariffs and non-tariff barriers between them. However, as was the case in the past, many countries now prefer to protect their domestic industries, which has had a negative effect on global business growth.
For example, foreign investors put a lot of money into some industries. Industries use capital to conduct research and development in order to improve technology in order to increase production and growth. Organizational performance is often described as an organization’s ability to survive and profit, and it is measured in both manufacturing and services. Customer satisfaction is the yardstick by which a service organization’s efficacy and efficiency are calculated, and such businesses prioritize good relationships over profit. While manufacturing organizations are more concerned with profit maximization, their key success and effectiveness is in the quality of their goods.
