international business management

International Business
Management

Factors Affecting Global Competitiveness:
Business firms abide by the rules and regulations formed by the government.
The government assumes a very important role in enhancing competitiveness.
 Physical infrastructure:
Physical infrastructure plays a critical role in improving the global competitiveness of
a country.

 coordination among public sector agencies:
The best methods include providing support and incentives for R&D activities, HRD
and education, encouraging innovativeness and creativity, facilitating the improvement
of industrial blocks.
 High total factor productivity:
(TFP) is a boon for economic growth. It shows the synergy and efficiency of both
capital and HR utilization and promotes national competitiveness.

 coordination among public sector agencies:
The best methods include providing support and incentives for R&D activities, HRD
and education, encouraging innovativeness and creativity, facilitating the improvement
of industrial blocks.
 High total factor productivity:
(TFP) is a boon for economic growth. It shows the synergy and efficiency of both
capital and HR utilization and promotes national competitiveness.
 Productivity campaigns:
are important because they promote public-awareness and provide mechanisms to use
the productivity tools and techniques.

Intensifying R&D activities:
that contribute to creativity, innovation, and indigenous technological development is
also an important factor.
 Improving the capacities of SMEs:
to become increasingly productive suppliers and exporters makes strategic sense.

What are Regional Trading Blocs?
A regional trading bloc (RTB) is a co-operative union or group of countries within a
specific geographical boundary. RTB protects its member nations within that region
from imports from the non-members. Trading blocs are a special type of economic
integration.
Four types of trading blocs:
 Preferential Trade Area:
Preferential Trade Areas (PTAs), the first step towards making a full-fledged RTB, exist
when countries of a particular geographical region agree to decrease or eliminate tariffs
on selected goods and services imported from other members of the area.

Free Trade Area:
Free Trade Areas (FTAs) are like PTAs but in FTAs, the participating countries agree to
remove or reduce barriers to trade on all goods coming from the participating
members.
 Customs Union:
A customs union has no tariff barriers between members, plus they agree to a common
(unified) external tariff against non-members.
 Common Markets:
A ‘common market’ is an exclusive economic integration. The member countries trade
freely all types of economic resources – not just tangible goods.

Advantages of Regional Trading Blocs:
 Foreign Direct Investment:
Foreign direct investment (FDI) surges in TRBs and it benefits the economies of
participating nations.
 Economies of Scale:
The larger markets created results in lower costs due to mass manufacturing of products
locally. These markets form economies of scale.
 Competition:
Trade blocs bring manufacturers from various economies, resulting in greater
competition. The competition promotes efficiency within firms.
 Trade Effects:
As tariffs are removed, the cost of imports goes down. Demand changes and consumers
become the king.

Market Efficiency:
The increased consumption, the changes in demand, and a greater amount of products
result in an efficient market.
Disadvantages of Regional Trading Blocs:
 Regionalism:
Trading blocs have bias in favor of their member countries. These economies establish
tariffs and quotas that protect intra-regional trade from outside forces.
 Loss of Sovereignty:
A trading bloc, particularly when it becomes a political union, leads to partial loss of
sovereignty of the member nations.

Concessions:
The RTB countries want to let non-member firms gain domestic market access only
after levying taxes.
Interdependence:
The countries of a bloc become interdependent on each other. A natural disaster,
conflict, or revolution in one country may have adverse effect on the economies of all
participants.

Four major trade blocs:
 ASEAN :
Association of Southeast Asian Nations (ASEAN) was established on August 8, 1967, in
Bangkok (Thailand).
• Members:
Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand, and Vietnam.
• Goals:
accelerate economic growth, social progress, and cultural development in the region and
(b) promote regional peace and stability .

EU:
The European Union (EU) was founded in 1951 by six neighboring states as the European Coal and Steel
Community (ECSC). Over time, it became the European Economic Community (EEC), then the
European Community (EC), and was ultimately transformed into the European Union (EU).
• Members:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden, The Netherlands, and the United Kingdom.
• Goals:
Accelerate sustained economic development based on social justice, environmental protection, and
reduction of poverty.

MERCOSUR :
Was established on 26 March 1991.
• Members:
Argentina, Brazil, Paraguay, Uruguay, and Venezuela, Chile, Colombia, Ecuador,
Guyana, Peru, and Suriname.
• Goals:
Accelerate sustained economic development based on social justice, environmental
protection, and reduction of poverty.

NAFTA:
The North American Free Trade Agreement (NAFTA) was signed on 1 January 1994.
• Members:
Canada, Mexico, and the United States of America.
• Goals:
The goals of NAFTA are to (a) eliminate trade barriers among its member states, (b)
promote an environment for free trade, (c) increase investment opportunities, and (d)
protect intellectual property rights.

international business management

international business management

More Related Content

What's hot (20)

Similar to international business management (20)

More from Faizan Rasool (11)

Recently uploaded (20)

international business management