THE FORMS OF INTERNATIONAL BUSINESS

When a firm makes choices about foreign operations that increase national and local responsiveness, the organization is more able to adapt to national and local market conditions. In contrast, the greater the level of standardization both within and across market, the greater the possible level of global efficiency. In many cases, the choice of foreign location generates unique advantages which includes better access to raw materials, less costly labor, key suppliers, key customers, energy, and natural resources. For instance, Google locates its computer-server farms (the technological backbone of its massive Internet services) closer to dams that produce hydroelectric power since it is one of the cheapest sources of electricity. And ultimately, managerial choices regarding the trade-off between global efficiency and local responsiveness are a function of the firm’s strategy, as they are likely to be a significant determinant of firm performance.

To kick start with the above topic, we need to keep in mind that a business can be a person or organization engaged in commerce with the aim of achieving a profit. Business profit, as we know, is typically gauged in financial and economic terms. However, some levels of sustained financial and economic profits are needed for a business to achieve other sustainable outcomes measured as social or environmental performance. Perhaps, it may not be a surprising fact to notice that international businesses can take on a variety of forms. Recognizing that international business encompasses government and nongovernmental organizations (NGOs), there are many companies which are for-profit businesses also have a social and environmental mission and therefore, we can have a look at the example of a company with this kind of mission from the table presented below.

International Forms of Government

The first example of the forms of international business is the governmental bodies. They are generally considered to be the body of people that sets and administers public policy and exercises executives, political, and sovereign power through customs, institutions, and laws within a state, country, or other political unit. Simply put, the government is the organization or agency, for which a political unit exercises its authority, controls and administers public policy, and directs and controls the actions of its members or subjects.

Most national governments, in addition, not maintain embassies and consulates in foreign countries, but also participate in international treaties related to such issues as trade, the environment, and child labor. For example, the North American Free Trade Agreement (NAFTA) is an agreement signed by the governments of the United States, Canada, and Mexico to create a trade bloc in North America in order to reduce or eliminate tariffs among the member countries and thus facilitate trade. The Kyoto Protocol, another example, is an agreement aimed at combating global warming among participating countries. In some cases, such European Community (EC) agreements span trade, the environment, labor, and many other subjects which are related to business, social, and environmental issues.

Nongovernmental Organizations

Following the international forms of government, the second example is the nongovernmental organizations (NGOs) which include any nonprofits and voluntary citizens’ groups that are organized on a local, national, or international level. International NGOs (NGOs whose operations cross borders), historically, date back to at least in the year of 1839. During the twentieth century, globalization actually fostered the development of NGOs because many problems could not be solved within a single nation. What’s more, such international treaties and organizations as the WTO were perceived by human rights activists as being too centered on the interests of business. Therefore, in attempts to counterbalance this trend, the so-called NGOs were formed to emphasize humanitarian issues, developmental aid, and sustainable development. One prominent example, perhaps, is the World Social Forum (a rival convention to the World Economic Forum) which is held every January in Davos, Switzerland.