INTERNATIONAL

UNIT 1 SECTION 6 THE FUTURE OF INTERNATIONAL BUSINESS

BUSINESS Unit 1, section 6: The future of international business

Dear student, so soon we have come to the end of Unit 1 as we delve

through Section 6. There comes a time when we have to take stock of our
lives as individuals in order to remain focus and plan ahead. This Section
introduces you to the future of international business, as well as the
advantages and disadvantages of international business.

International Business opportunities grow more interesting by the day. The

relaxation of restrictions as a result of economic integration has led to new
and expanding markets which present great potentials and challenges for
trade and investment. Changes in technology have also changed the
landscape of global business. This is due to the fact that businesses have
found that many foreign markets are often no further than a mouse-click or a
button-push away! Briefly then, let us look at issues that are certain to
influence global markets in the 21st century.

By the end of this Section, you should be able to:

 discuss the future of international business;
 define globalisation
 identify challenges to the future of international business; and
 explain the merit and demerits of globalisation

Now read on.....

Technology and the Future of International Business

Advances in technology and communication have made global markets
accessible instantly. Businesses operating in the international arena are
doing all within their means to lure most of the over 7.5 billion people
dwelling on the face of planet earth currently to patronise their products or
services. This lure is very keen in the fast developing economic tigers in
Asia such as Singapore, South Korea, Taiwan, and Malaysia.

But the most spectacular technological advances are taking place in the
world’s most popular country, China. With a population of over 1.3 billion
people, China is the fastest growing economy in the world, and has now
overtaken Japan as the second largest economy. This has been possible
because China is gradually shifting from centrally planned economy to the
free market economy. Russia and India, like China, also present huge
opportunities.

As technology continues its unprecedented growth, markets in the rest of the

world also continue to enjoy instant accessibility. The growth of the internet
and advances in e-commence enable companies worldwide to bypass the
normally required distribution channels to reach larger markets. In fact,
some authorities suggest that e-commence is the future of international
business. It is important, though, to remember that obstacles or drawbacks
with technology still exist in international business.

38 UEW/IEDE
 INTERNATIONAL
Unit 1, section 6: The future of international business BUSINESS

The major challenge has been lack of the appropriate information,

particularly for small businesses. In fact a survey conducted in the U.S. in
2012 showed that about 25 percent of small businesses could not find the
appropriate information on the web that could help them do business
globally. If this is the picture in the almighty U.S., then one can imagine the
challenges that small businesses in developing countries face!
In addition, some developing countries fear that e-commerce will lead to the
erosion of their cultures and languages, by exacerbating the brain drain.

Overcoming such technological and social obstacles is one of the challenges

confronting international business in this 21st century. In spite of these
challenges, though, technology has the potential to radically change
business and create opportunities for firms in global trade regardless of size.

International Business and Globalisation: Matters Arising

International business or globalisation is not a new phenomenon as it has
falsely been peddled. Man has practiced international business and
globalisation since the time of Adam, because the exchange of goods,
services, knowledge, and technical know-how started with the dawn of time.
But it was only given a human face in the mid-1980s.

Globalisation has four major characteristics.

First, it involves a stretching of socio-cultural and economic activities across
frontiers, regions, and continents.
Secondly, it can be linked with the growing of interconnectedness and flows
of trade, investment, finance and migration.
Thirdly, Globalisation can be associated with the development of the
worldwide system of transportation and communication links.
And lastly, the growing intensity of global interactions, exchange of ideas,
information and technological innovations and inventions are all direct
consequences of globalisation.

Clearly, therefore, globalisation is a multi-dimensional phenomenon with

both threats and opportunities like a double-edged sword. To this extent, no
country in the universe can also escape “globalisation and its discontent”.
Neither can any country isolate itself from the growing global
interconnectedness. And no development can come without some work
alongside risk. However, the crux of the matter is how one can manage the
risks of globalisation in order to reap its benefits and minimise the
downsides, which may be termed as “strategic global integration”.

In this regard, it would be better if policy makers in third world countries,

especially in Africa, analyse the threats and opportunities of globalisation to
their economies. They need to fashion out measures to overcome the threats
and challenges and also put up the necessary mechanism in place to reap the
opportunities that globalisation offers.

UEW/IEDE 39
INTERNATIONAL
BUSINESS Unit 1, section 6: The future of international business

Some Advantages of Globalisation and International Business

 Increase free trade between nations.
 Corporations have greater flexibility to operate across borders.
 Global mass media ties the world together.
 Increased flow of communications allows vital information to be shared
between individuals and corporations around the world.
 Greater ease and speed of transportation for goods and people.
 Reduction of cultural barriers increases the global village effect.
 Spread of democratic ideas to developing nations.
 Greater interdependence of nations

Some Disadvantages of Globalisation and International

Business
 Increased flow of skilled and non-skilled jobs from developing to
developed nations as corporations seek out the cheapest labour.
 Increased economic disruptions of oil producing nations affect all
nations.
 Corporate influence of nations far exceeds that of civil society
organisations and average individuals.
 Threat of control of world media by a handful of corporations will limit
cultural expression.
 Greater risk of diseases (bird flu, ebola) being spread among nations.
 International bodies like the World Trade Organisation, IMF, etc
infringe on national sovereignty.
 Increase in overt civil warfare within developing countries, and covert or
cold wars between developed countries as they vie for resources in
developing countries.
 Increases in environmental pollution in all its forms.

Globalisation and You

Whether you are aspiring to be an entrepreneur, a manager or some other
type of business leader, you must begin to think globally as you go through
this course. Global markets are overflowing with opportunities, yet they are
laced with many challenges and complexities. You can study foreign
languages, learn about foreign cultures, and study other business subjects in
order to develop a global perspective of your future. The potential of global
markets does not belong only to multinationals. In fact, conglomerates are
rather saddled with very wide and hierarchical bureaucracies. Hence, small
and medium-size enterprises should be better prepared to leap into the
global business than large businesses.

Summary
We have attempted to explain the future of international business in this
Section. We have pointed out that technology is seen as very keen in the

40 UEW/IEDE
 INTERNATIONAL
Unit 1, section 6: The future of international business BUSINESS

success of firms doing business with the rest of the world. We have also
explained the pitfalls that countries should be mindful of if they are to
benefit fully from international business, and your own future, i.e. how you
are affected by international business. We hope that after studying this
Section and indeed, the entire book, you will begin to think globally.

Please, refer to other texts in the references provided for further information
on the meaning and importance of this topic. Put down any important notes
you come across in the blank sheet provided below for face-to-face
discussions with your course lecturer.

Can you now assess your understanding of this Section by answering the
following Self Assessment Questions (SAQs)? Good luck!

Activity 1.6
 Explain the effect of technology on the future of international business.
 List five merits and demerits of international business.
 Explain the four major characteristics of globalisation.
 Small and medium-size enterprises are often better prepared to leap into
global business than larger businesses. True or False.

Did you score all? That’s great! Keep it up.

UEW/IEDE 41
INTERNATIONAL
BUSINESS Unit 1,
This page
section
is left6:blank
The future
for your
of international
notes business

42 UEW/IEDE