What is global business? Global business is defined when an organization (or company) conducts business internationally and/or does international business abroad. The most often discussed international entrant is the multi-national enterprise (MNA). These include companies and firms operating in dozens of countries from around the globe. They tend to be very vertically integrated with units located in many different countries.
An MNA can incorporate a cross border entity. A firm can be incorporated in its mother country but conduct its economic activities (and sometimes even its internal business) in a different country. For example, an American venture capital firm could be incorporated in the United States and conduct its business in India. This can be done seamlessly because the mother company can be located anywhere in the world since it only carries out business in the country where its majority shareholder is located.
How do international businesses happen? There are two main ways to create a global business. One is by creating a new company in one country and setting up operations in a different country. Another way is to import a firm with the appropriate managerial structure from one country and operate it on a global basis. Perhaps the best illustration of importing a firm is Toyota. Japan manufactured the world’s first car – the Prius – and imported it into the U.S. without charging the U.S. tax required for automaker profits.
Cross Border Entrepreneurship Just as the name implies, cross border entrepreneurship is when firms that are based in one country to engage in activities or goods that are conducted elsewhere. Some of these activities may be lawful and some not. When firms conduct business cross borders, they are not strictly considered part of their home country’s economy. However, because they have a greater opportunity for growth and success, they are considered foreign investments. In order to qualify as a cross-border venture, companies have to follow the same procedures as companies that are domiciled within the country in which they are established.
Cross Borders Agreements There are many types of agreements that facilitate cross-border activity. A number of these agreements have to do with the services sector. Many international consulting firms, for example, operate their business through services contracts. When a company conducts business internationally and requires professional advice, these firms will seek out an international advisor who can use his experience and skills to help them assess their own situation and determine the best options.
Many global business consultancies also offer services that are not necessarily legal. They may, for example, make recommendations about the best ways for domestic and global business firms to grow their businesses. These recommendations can be used as a means of helping companies develop strategies that will lead to growth and success.
Offshore Outsourcing Companies need to be careful how they choose the service provider that they use for global business. Many global companies have a limited understanding of the cultural norms, financial practices, and language and legal requirements of countries in which they do business. Without careful screening, these companies could find themselves at a severe disadvantage when it comes to trying to serve customers in other countries. Before outsourcing any part of their global work or services, companies need to ensure they are selecting the best provider for the job.
It’s important for all companies involved in global business to remember that, regardless of where they are located, all laws must be observed. The ramifications of breaking any laws can be far reaching and very difficult to recover from. Additionally, it is vital that employees performing global business tasks are adequately trained in the culture of each country where they are working. They need to know the local customs, understand the differences in taxation, and be aware of any and all national and local rules that may apply. Finally, these employees need to be aware that there may be consequences for the way they conduct themselves that may result in their firing from their jobs.
