The world of business has experienced remarkable advancement in the 21st century. This is primarily due to increased diversification of markets in the contemporary economies where business entities are currently focusing on global markets rather than limiting themselves to domestic and foreign markets (Goddard 4). The changing trends in the modern economy have led to the development of international trade and business.
“In its purest form, international business is described as any business activity that crosses national boundaries” (Goddard 4). International business can take the form of foreign trade, trade in services, portfolio investment or direct investment (Goddard 4). Foreign trade involves trade in tangible imports and exports between different countries while trade in services involves firms providing services in the international market such as travel companies or insurance. In addition, portfolio investment refers to financial investments made by residents of a country in a foreign country while direct investment refers to partial or total ownership of foreign subsidiary.
International business has been practiced in the world for a long time but its forms and methods are dynamic hence constantly evolving (Goddard 5). In order to reap the benefits derived from international businesses, multinational companies should ensure that they minimize the risk to the company resources and finances and maximum protection of diverse opportunities that are present in the international market (Goddard 265).
In addition, companies should maintain adequate and effective amount of working capital (Goddard 265) which should be appropriately managed to minimize occurrence of business failure resulting from lack of funds or presence of idle balances. International companies should adhere to the rules and regulations of international business. These include payment of taxes and duties, legal requirements governing imports and exports, international quality standards among other things.
Companies have constantly struggled to formulate strategies which would enable organizations to reach high levels of efficiency (Butcher ix). Effective logistics and supply chain management has had considerable impact on performance of businesses and its commonly viewed by international corporations as an important means through which businesses serve and fulfill consumer needs as well as providing a potential source of competitive advantage (Butcher, ix)
Logistics and supply chain management affects almost all areas of life (Butcher 4). All products that reach international consumers have to be transported at a certain cost from producers to the market through application of logistics and supply chain management principles.
Though these terms are often used interchangeably their meanings are distinct. “Logistics involves getting in the right way, the right product, in the right quantity and quality, in the right place at the right time for the right customer at the right cost” (Butcher, 9). On the other hand, the supply chain comprises a network of organizations that take part in different levels of processes and activities that promote value addition to the products reaching the ultimate consumer (Butcher 10) and supply chain management ensures management of these networks of upstream and downstream organizations.
International companies should try as much as possible to sell directly to their consumers by disinter mediating the middle men which ensures that the products reach customers faster (Butcher 53). This has evidently led to success of major international businesses like Dell. In addition, companies should aim to achieve full visibility and partnership with suppliers (Butcher, 54). The international companies supply chain management should create room for direct interactions with consumers and establish sales and production links to suppliers who deliver goods in time.
Butcher, Tim., Lalwani, Chandra., and Mangan, John. Global logistics and supply chain management, UK: John Wiley and sons, 2008. Print.
Goddard G. Jason; Cool Karel., and Ajami A. Riad. International business: theory and practice, New York: M. E, Sharpe, 2006. Print.