International business is the act of conducting commerce with multiple countries. A multinational corporation may outsource the assembly of its microprocessors in China, while having its consulting firm in Singapore. Similarly, a small business owner who makes scarves could decide to offer her products to the French population.
Low Prices
Companies engage in commerce with overseas markets in an effort to lower prices and increase its profits. For example, a computer company may deem that it can buy copper for less money from a vendor in Mexico than New Mexico, and can lower their labor costs by tapping into the Indian workforce than the Indiana labor market. To maintain a competitive advantage, companies typically transfer these reductions in costs onto customers, who then purchase goods at a lower price. Some commodities produced in other countries are already inexpensive due to an abundance of resources: Bananas from Ecuador, for instance, are less costly to produce and sell than exerting resources to grow them within the United States. Thus, one important element of international business is reducing the price of goods.
Competition and Product Availability
In the 1950s, the variety of goods available to most people was limited to whatever the local store shelves contained. Today, the products offered to consumers are nearly boundless due to the ability to procure goods from overseas. Inexpensive clothing from China, gemstones from Sri Lanka, televisions from South Korea and spices from Singapore are just a few of the products consumers purchase from abroad for significantly lower prices.
Additionally, businesses face stiffer competition due to international vendors purveying the same products. A natural response to competition is working harder to develop an innovative product or offer the same goods at a lower cost; in both cases, the consumer wins.
Global Prosperity
Thomas Friedman, author of "The World is Flat" explains a phenomenon of globalization called the 'Dell theory of conflict resolution.' Friedman purports that countries whose economies are linked via a company's supply chain are much less likely to go to war due to the devastating effects on the country's economy. Thus, when large corporations are dependent on another country's resources or commerce, the two nations are much more likely to be diplomatic. On the other hand, one reason governments impose sanctions is to separate its economy from a potentially threatening nation's -- ergo, if the countries go to war with the other, local businesses will not be negatively affected. International business plays a critical role in maintaining peace between countries.
Considerations
Critics of globalization argue that some multinational corporations exploit the population of foreign countries. Naomi Klein states in her book "No Logo" that several international businesses make the quality of life worse for the indigenous populations by outsourcing its operations to factories with horrible working conditions. Other examples include using the land in third world countries as the dumping grounds for waste. An example includes depositing harmful electronic materials in Africa, Asia and Latin America.
