Global Business Essay

Globalisation and operate business globally are significant issues for contemporary organisations. Global business is refers as an economic activity that operates in different countries that selling and buying goods and services by people (McWilliams 2010).Businesses are incentivized to sell products and services in foreign markets with technology advancing so fast and international trade expanding. The global business strategy vision is to develop far beyond the borders of their countries and allow businesses to grow (Chan & Justis 1997).Through global business, it helps enterprises reduce costs, expand their market share and become more competitive. There are two impact of global business. One of the impact is multinational corporations

The term "export" is derived from the conceptual meaning as companies produce products in their own countries and sell goods to customers in foreign countries. Exporting allows a company to centrally produce its products for several markets and therefore to gain economies of scale since many countries do not offer a large enough opportunity to justify local production. ‘Export development is associated to high levels of cooperation between exporters and importers, high levels of trust, and communication sufficiency.’(Rodriguez, Wize & Martinez 2013, p.1646)One of the advantages is that makes the company less dependent on sales in its home market and provides a wider range of goods and services In addition, the potential market is bigger by selling overseas. Foreign sales over the long term, it will increase overall profitability once export development costs have been covered. Besides, exporting also provides a greater degree of control over all aspects of transaction such as design, production decisions and research. (Cunningham & Spigel 1971). There are disadvantages highlighted in the exporting such as final cost of export goods are affected by tariff and non-tariff barriers (McWilliams 2010). One of the disadvantage is the shipping costs add to the price that a company has to charge for its products overseas especially for a country like Australia. Another disadvantage is financial risk. This means that

Cooperative contract is an agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country. There are two types of cooperative contracts: licensing and franchising. Licensing agreement refers to the licensor allows the licensee the right to sell and produce goods as well as apply a brand name owned by the licensor (McWilliams 2010). Licensing offers both advantages and the disadvantages. One of the advantages is that it allows companies quickly expand without high risk and obtain extra income without investing more money. The licensor paid the royalty fees by the foreign licensee rises as foreign sales rises. In addition, companies avoid tariff and non-tariff barriers by licensing. The disadvantages of licensing is the licensor loss quality of the product and lose control over manufacture and marketing operations in foreign countries. There even is a risk that foreign licenses can eventually sell a similar competitive product where the parental company has a presence. Franchise agreement is the franchisor gives a licensed privilege to the franchisee to run some business (McWilliams 2010). People will probably see franchise business such as Starbucks or McDonald’s in every country. Franchisors provide franchisees with valuable training and support structures, assistance with brand recognition of the company and national-wide