Last Updated 08 May 2020

Contemporary Business Activity Associated with Operating in a Global Environment

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Globalization of markets and business activities has created new opportunities for some individuals and companies, while creating challenges and threats to other companies. The lowered barriers to trade have increased the ability of producers of a wide range of items, from food products to appliances to industrial supplies and parts, to expand from regional or national markets to selling internationally. A contemporary business activity is not less secure than 20 years ago faced with increased competition and unfair policies followed by some companies.

The main problems of a contemporary business activity are increased competition and corruption. A global industry is one in which competitive advantage can be achieved by inte­grating and leveraging operations on a worldwide scale. Put another way, an indus­try is global to the extent that a company's industry position in one country is inter­dependent with its industry position in other countries (Culpan 2002). On the one hand, a business activity receives a chance to compete on the global scale generating more profit. On the other hand, many foreign companies like MNEs is a threat for small and medium size enterprises who cannot compete with such giants. Price reduction and international regulations are the main tools which help small companies to ‘cope with’ these problems (Culpan 2002). For many companies, the changing global environment combines elements of both new products and services that add to their opportunities, and additional competition in existing and substitute products and services. Whatever the combination encountered, the importance of international marketing opportunities and threats is increasing. The internationalization occurring may thus be seen as resulting from a combination of factors in the home country market, the (prospective) host country market, the global environment, and characteristics of individual firms (Johnson, Turner 2003).

The network model is one of the solutions which ensure strong position of the companies operating in a global environment. A basic assumption in the network model is that the individual firm is dependent on resources controlled by other firms. The companies get access to these external resources through their network positions. Since the development of positions takes time and depends on resource accumulations, a firm must establish and develop positions in relation to counterparts in foreign networks. This can be achieved by (1) international extension, through establishment of positions in national nets that are new to the firm, (2) penetration, by developing an existing foreign position, and (3) international integration, by increasing coordination between positions in different national nets (Johnson, Turner 2003).

Corruption of officials is of concern to many throughout the world. Corruption can affect the international marketer in many ways, both positive and negative. Countries are using many measures to fight corruption with the intent of control, reduction, and ultimately elimination. When companies operate abroad in the absence of home-country legal con­straints, they face a continuum of choices concerning company ethics. At one extreme, they can maintain home-country ethics worldwide with absolutely no adjustment or adaptation to local practice. At the other extreme, they can abandon any attempt to maintain company ethics and adapt entirely to local conditions and circumstances as they are perceived by company managers in each local environ­ment. Between these extremes, one approach that companies may select is to utilize varying degrees of extension of home-country ethics. Alternatively, they may adapt in varying degrees to local customs and practices. The degree of legal cooperation and harmony in the EU is unique and stems in part from the existence of code law as a common bond. Other regional organizations have made far less progress toward harmonization (Anti?, Sekuli? 2005; Johnson, Turner 2003).

Another are of concern is transactions. Financing overseas transaction can be different types according to country of buyer’s and seller’s financial potential. Some of them are more secure while the other represents some risks for both parties. The main methods are sales on consignment basis, long-term financing, documents against acceptance, documents against payment, letter of credit, cash on delivery, sales on open account, and cash with order. Variations in management strategy also account for the way different companies handle issues of industrial relations. The financial procedures that have been developed, although rather complicated, provide export marketers with the services and tools essential to control payment for internationally traded merchandise. Although banks engage in international finance for the purpose of making profits, the services they furnish are indispensable aids to the export.

Tariff is another protective measure in contemporary business activities aimed to regulate foreign operations and ensure fair competition between local and foreign suppliers. Tariffs can be seen as temporary measures taken by the government. A protective tariff helps the government ensure competition and to bring the price level of the product up to that of local substitutes. Another type of tariff, a revenue tariff, is usually introduced by the government to generate revenue for the country. Also, tariffs can serve as antidumping measures. The recent trend towards giving more information to employees and unions may produce a situation where the figures for home subsidiaries may not be sufficient. In regional federating of the state first of all try to use advantages of free trade, and each trade units will attempt to boost the influencing through a method (reception, acceptance) of new terms (Ellis 2001, 1).

In sum, operating on the global scale, it is crucial to take extreme care developing an action plan and foreign market operation. Recent years, business activities are becoming increasingly important as companies in all parts of the world step up their efforts to supply and service markets outside their national boundaries.

Works Cited Page

1.      Anti?, L., Sekuli?, V. New Paradigm of Business Performance Measurement in Contemporary Business Conditions. Economics and Organization Vol. 3, No 1, 2006, pp. 69 – 77. ;facta.junis.ni.ac.yu/facta/eao/eao2006/eao2006-07.pdf;

2.      Culpan, R. Global Business Alliances: Theory and Practice. Quorum Books, 2002

3.      Ellis, V. Can Global Business Be a Force for Good? New Statesman, Vol. 130, July 16, 2001, p. 1.

4.      Johnson, D., Turner, C. International Business: Themes and Issues in the Modern Global Economy. Routledge, 2003.

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