International Business Theory and Practices for Globalization

Question: Discuss about theInternational Business Theory and Practices for Globalization. Answer: Introduction International business theories and practices are related to international trade and globalization. International trade can be defined as the interchange of products and services across the global borders. It is the inflow and outflow of capital, technology, skills, knowledge, products and services beyond the international territories and borders. With the help of international trade, the consumers are able to be exposed to various markets and goods. Goods which are sold in the international market are termed as export whereas those which are purchased in the global market are termed as imports. There are various aspects of international business theory and practices. Advanced technology, industrialization, globalization, multinational companies and outsourcing are some of the attributes of theories and practices of international business and trade (Anowor Ugochukwu, 2015). Globalization refers to the international trade amongst various countries of the world. It pertains to combining the economies of the various countries together with the help of international trade, inflow and outflow of investments, information technology and outsourced manufacturing. So, in this report, various issues relating to international business theories and practices in the context of 5 international business news reports would be discussed. Additionally, their importance with the reference of the topic will also be analyzed. Issues relating to International Business Theories and Practices Globalization Globalization can be referred to the international integration of the investments, international trade, cultures and information technology. It is driven by the policies of the government which promote to open the economies of the home countries to carry on trade internationally. With the help of globalization, the companies can gain a competitive advantage through lesser operating costs. It helps in accessing new raw materials and additional markets and they can create and trade the goods globally (Verter, 2015). According to Schuknecht (2017) the public policy and technology are the main driving factors behind globalization. In order to manage globalization, there is a necessity for better policy activism rather than targeting on the importance of policies which are based on the regulations framed by the government. For the emerging economies, globalization can be helpful in enhancing the productivity of the commercial activities of the country along with an improvement in the technologies which can assist in lifting the living standards of the people. The advancement in the economies can increase the income which can help in declining the global disparity. But at the same time, globalization has made lives difficult for the low income and low skilled people in the West. Migration has added more strains on the schools and housing for the low income groups. Besides this, due to low level of education in the underdeveloped and developing countries, security issues relating to unsafe neighborhoods are arising. The low skilled people are finding it more difficult to be competitive and to cope up with the transformations which globalization has bought along with their incapability to seek the opportunities to grow in the society (Mackintosh, 2017). Globalization has also led to the decline in the fiscal rules in the European Union. It has also resulted in the global trafficking of people and use of violence in international trade and security relations. Additionally due to globalization, the rules are applied in an unfair manner. During the financial crises, the citizens have to pay taxes whereas very low or negative interest rates have been charged from the rich. Therefore the debate should be focused on the importance of rule based policy making. Laws relating to Intellectual Property Rights According to Business Standard (2018) the state council and cabinet of China issued regulations regarding the transfer of intellectual property rights to the foreign investors .It may affect the national security and the IP related transfers regarding the semi-conductor, software and agriculture. As per Kataria (2015) IP law play a crucial role in framing the policies related to industry, trade and finance for the scientific and technological development of any country. The IP regulations must be strong enough to ensure the progress of the countrys knowledge bank. Additionally, strong IP laws must be assisted by strong enforcement procedures, as without enforcement, the IP rights cannot be enjoyed. The new entrants face competition which makes difficult for them to enter the European and the US markets. These circumstances make the marketplace less available for them. Strict licensing rules, high funding and skill requirements are some of the factors affecting the admittance of the new entrants (Kyrkilis Koboti, 2015). The Indian IP policies despite of complying with the International standards provided by the TRIPS agreement are declared to be weak and inefficient pertaining to safeguarding of patents. According to the GIPC index of the US Chamber of Commerce, India has improved in the last two years in IP enforcement, but still has to make lots of efforts to develop itself. India has been on the second last position which depicts that it has performed poorly in context of the compliance with the patent requirements to the International standards. Besides this, it has also performed poorly in granting damages upon the infringement of the IP rights. The scenario of the Patent rights is very demotivating in India. The Indian Courts do not grant rulings and calculate and award damages easily. It leads to a ban in enjoyment of the IP rights fully by the IP right holders. Thus the infringement of IP rights has become a curse and is the main reasons for the underdevelopment of the Indian economy. Cultural Issues in International Business As per Kanungo (2016) the recent slowdown in the exports of India calls for the verification of the essential procedures relating to Indias foreign trade. One of the policies is the identification of the geographical indications (GI). Due to the unequal treatment in the developing countries, they are unable to exploit their potential. GI are industrial properties which originate from a particular place. The important attributes to the geographical origin are the quality, reputation etc. Thus GI helps the producers of that particular origin to distinguish their products from the other competing goods in the market thereby enabling them to build a reputation, goodwill and premium price for that product. Indian products such as Kanjeevaram Silk Sarees, Pochampally Ikat etc. have contributed to Indian exports. With the emergence of the Trade Related Aspects of the Intellectual Property Rights (TRIPS), the issue regarding the cross border protection of the GI has originated. According to Article 22 of the Agreement, the cross border protection of GI is provided in the context of international trade. It has included India and other developing countries. India and the other WTO members have raised the issue to seek a higher level of protection for all GIs as it is specified in the case of wines and spirits as per Article 23 of the agreement. Around 170 of the Indian products have been registered as GIs in India. It will gain the benefits of the GI only when the products are effectively marketed and protected against illegal imitation. So, there is a direct connection between the cultural diversity in India and the legal protection of the GI regarding the goods produced as a result of the cultural diversity. Supply Chain Complexities According to the opinion of Murray (2017) France has introduced new regulations requiring the French companies to report regarding their elimination of the violations from the global supply chains and also to apply the plans regarding their prevention in the future. As per the Devoir de Vigilance or the Duty of Care law, the sufferers can demand for the compensation of the losses for negligence of duty . Earlier it was easier for the companies to neglect their duty to follow the regulations regarding the violations of the global supply chains. But on the other hand, when the regulations are stricter about running the supply chains free from child labor, slavery, corruption and other unethical issues, it is difficult to verify whether the companies operating in the various parts of the world are practicing ethical norms. For example, in the electronics sector, the parts of the products are obtained from producers from various parts of the world (Ge et al., 2016). In the sea food industry, which has got the maximum chances of slavery, the tracing of the origin of the products is difficult when the supply chains comprise of commercial activities of the fishmeal producers and fishing fleets to packing and processing industries. In the garment industry, which faces a challenge to trace every contractor and sub-contractor in the supply chain, it becomes difficult to trace the violators of the law. Even the third party audits to verify whether a company is violating norms regarding the global supply chain have limited effects (Seyda, 2013). As per Mitchell Garrett (2017) ethical challenges are faced by the automobile and technology sectors as they attempt to deliver greener and long lasting goods to their customers. Due to the electronic vehicle boom, the demand for the battery metals like cobalt and lithium has increased. This has led to the increase in the issues such as child labor and pollution in countries such as Democratic Republic of Congo. However, to improve the situation the European Union will impose new regulations on the import of ethical raw materials in 2021. The emergence of the new technologies have made the task of sourcing raw materials easier along with the block chain technology which is a natural technique to deliver the ethical sourcing of raw materials. Worldwide Environmental Issues According to Financial Express (2018) India is the fourth worst country in reduction of the environmental pollution .As per the latest global Environmental Performance Index (EPI) India is at the 177th position out of 180 countries in curbing the environmental pollution. The countries were ranked on the basis of 24 performance indicators across 10 categories consisting environmental health and eco system vitality. The population pressure and the rapid economic development are the reasons behind the environmental pollution. The low scores on the EPI are indicators that the sustainability efforts on the national level such as cleaning of the air , reduction in the emission of the greenhouse gases(GHG) and the protection of the biodiversity (Nunez Atkins,2016). As per Financial Express(2018) according to a new survey, the risk related to the environment, economy an d international relations will deepen in the year 2018.The biggest risks would be the weapons of mass destruction, climate change , water and food crisis, changes in the weather, loss of biodiversity and ecosystem and spread of infectious disease. The breakdown of the global systems should be taken seriously and the institutions, societies and environment should not be allowed to weaken (Charles, 2016). As per Business Standard (2018) the UK chocolate industry emits 2.1 million tons of greenhouse gases per year. Also, 1000 liters of water is used to produce one chocolate bar. The raw materials which are used to produce chocolates and packaging are the major causes of environmental pollution. Also, the dairy cows produce the greenhouse gas emissions per liter of milk produced by them. So, the chocolate industry has to take suitable measures to produce ecofriendly products. Conclusion Thus, to conclude, it can be said that the issues confronted by the international business have to be resolved for a sustainable tomorrow. The international business environment has transformed a lot in the last decades. With the development of the international business environment, there has been an increase in the problem and issues faced by the business operating across borders. They include globalization, laws pertaining to intellectual property rights, cultural issues, supply chain complexities and environmental issues on the international level. Due to globalization, the low skilled and low income group has suffered to a greater extent. Particularly in the underdeveloped and developing economies, the gap between the poor and the rich has increased. Due to the infringement of the laws of the Intellectual Property Rights, the owners have not been able to enjoy the IP rights. Also, the cultural issues, supply chain complexities and the environmental issues should be resolved in order to promote free and fair trade in the global market place. References Anowor, O.F. Ugochukwu, A.H. (2015). Foreign Trade and Nigerian Economy. Developing Country Studies. 5(6), 77-82. Business Standard (2018) .China issues guidelines on transfer of IP rights to foreign investors. Retrieved April 6th, 2018 from https://www.business-standard.com/article/international/china-issues-guidelines-on-transfer-of-ip-rights-to-foreign-investors-118032900527_1.html Business Standard (2018) .Chocolate production may be harming environment: study. Retrieved April 6th, 2018 from https://www.business-standard.com/article/pti-stories/chocolate-production-may-be-harming-environment-study-118040200177_1.html Charles, R. (2016). Global Environment: Issues, Challenges and Concerns. Syrawood Publishing House. Financial Express (2018) .India among 5 worst nations in curbing environmental pollution. 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