Category: International Business

Pros and Cons of International Business: Analytical Essay

Traditionally, international business is defined as a business that engages in international economic activities. It can also refer to the action of doing business abroad (Peng). Many businesses are either international or are domestic businesses competing against international businesses. Having a good understanding of what international business is can help business owners make better decisions, because international business is a rapidly changing environment. For example, according to market analyst Bert Markgraf, “Environmental factors are a major influence in the West and will become more so worldwide. Businesses must take into account the environmental impact of their normal operations. They can try to market environmentally friendly technologies internationally. The advantage of this market is that it is expected to grow more rapidly than the overall economy.” Therefore, in order to adapt to the rapidly changing environment of international business, it’s better to understand the way international business works and be able to take advantage of new emerging markets.

The political/legal/economic systems are very important aspects in international business. A political system refers to the rules of the game on how a country is governed politically. At the broadest level, there are two primary political systems: (1) democracy and (2) totalitarianism (Peng). A legal system refers to the formal rules of the game on how a country’s laws are enacted and enforced. By specifying the do’s and don’ts, a legal system reduces transaction costs by minimizing uncertainty and combating opportunism (Peng). International business needs to follow a certain set of political laws and rules made by governments both in domestic (Home) and foreign (Host) countries. This can be what is called “International Law”. Home governments can apply political decrees not to deal with disapproved political parties. These measures may take the refusal to grant an export license, or withdrawal of export guarantee cover. The host government may take measures like taxation, ownership controls, operating restrictions or expropriation (Fao). International businesses must follow the political and legal system of any country, or they face risk of losing good opportunities. For example, investing in a totalitarian state, like North Korea, can be an extremely tricky and risky. In a totalitarian government, the state exercises its power by developing a political structure that it can use to exert its power in such a way that it controls all aspects of the public and private life of its citizens (Armstrong, 2002). Being able to turn the disadvantage that comes with such a regime takes time and patience. One of the ways that one can gain some form of advantage is by gaining favor with the existing regime and forming good relations with the respective leaders (IP).

Depending on the political and legal aspects of a country the economic system plays a large role in whether an international business gains profit or not. An economic system refers to the rules of the game on how a country is governed economically (Peng). Financial stability, language, economic system, and local cultural factors can influence which markets a business should invest into. Countries are endowed with different assets and natural resources (land, labor, capital, and technology). Certain countries may produce the same good more efficiently and sell it at a lower price rate than other countries. If a country cannot produce a certain item, it can obtain the item by trading with another country that can efficiently produce it. This is the highlight in international trade. For example, if you can walk into a supermarket and find South American bananas, Brazilian coffee and a bottle of South African wine, you’re experiencing the effects of international trade (INPedia).

Foreign direct investment (FDI) means directly investing in, controlling, and managing value-added activities in other countries (Peng). Such investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges offered by the country (Mehra). There are certain pros and cons when directly investing in a foreign country.

Pros:

• Increased employment rate, and increase in production
• Trade and transfer of new technologies, management skills, and intellectual property
• Increased rate of exports

Cons:

• Risk of losing ownership to foreign company
• Small enterprises fear risk of not being able to compete with large companies
• Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company

Offshoring is the relocation of a business process to another country. The offshoring operation can be performed by a subsidiary of the same company, or by an offshore services provider (FS). Offshoring can greatly affect an organization’s ability to be competitive.

Pros:

• Lower labor costs – It is more affordable for companies in the United States to pay foreign employees who have lower salaries compared to employees within the country (FS).
• 24/7 operations – Companies can cover time zones not handled by their operations through offshore subsidiaries or by hiring offshore service providers that offer 24/7 operations (FS).
• Availability of skilled labor – Offshoring from certain countries with variety of skilled laborers from which U.S. companies can recruit employees for their offshoring operations. These countries have a rich pool of talent in terms of English language proficiency, college degree earners, and the skills of their workforce (FS).

Cons:

• Cultural and social issues – Offshore countries have cultural and social customs that are very different from the countries of the originating companies. For example, an American executive may talk in a candid, outspoken manner while his Filipino employees are more reserved and not used to the frank approach of communicating. Both parties may miscommunicate what they intend to say to each other and this could lead to misunderstanding (FS).
• Quality control problems – For manufacturing offshoring, ensuring that a product is strictly built according to the parent company’s standards may be a challenge under the offshore location’s manufacturing set-up. Even if the parent company provides quality guidelines, the differences in working culture, language, logistics and supply chains of the country where the factory is located may affect the quality of the finished product (FS).

Geert Hofstede, a Dutch professor. He defines culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another.” (Peng). Hofstede developed a model that identifies four primary dimensions to differentiate cultures. He later added a fifth dimension.” The first four dimensions of culture dealt with areas that different societies handled differently, such as individualism and collectivism, power distance, masculinity and femininity, and uncertainty avoidance. Later, a fifth dimension that highlighted differences between long-term and short-term orientation was added. “These five dimensions, taken together, can give important insights for someone wishing to enter a new culture for business, study, travel or other purposes,” Tuleja says.

• Individualism and collectivism is one of the first four clusters. It looks at the relationship the individual has with others.
• The outcome of individualism and collectivism “focuses on the degree a society reinforces individual or collective achievement and interpersonal relationships,” Tuleja says.
• The second cluster, power distance, focuses on the extent to which the less powerful members of institutions, such as the family, expect and accept that power is distributed unequally.
• Tuleja said it represents inequality but defined from below, not above. “It suggests inequality is endorsed by the leaders and followers,” Tuleja says. “Power and inequality are fundamental factors of any society and anybody with some international experience will realize all societies are unequal, but some societies are more unequal than others,” says Hofstede.
• The third cluster is masculinity and femininity.
• Hofstede defines masculinity as “a society in which social gender roles are clearly distinct: Men are supposed to be assertive, tough and focused on material success; women are supposed to be more modest, tender and concerned with the quality of life.
• “Femininity stands for a society in which social gender roles overlap: Both men and women are supposed to be modest, tender and concerned with the quality of life,” he said.
• The fourth cluster is referred to as uncertainty avoidance, which denotes the need to avoid uncertainty about the future and in work relationships.
• The uncertainty avoidance index focuses on the level of tolerance for uncertainty and ambiguity within the society. A high uncertainty avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. It fosters a rules-oriented society.
• The more recently added cluster spotlights long-term and short-term orientation. “Is society focused on the past, present or future?” is the question here, Tuleja says.
• “Long-term orientation focuses on the degree the society embraces or does not embrace long-term devotion to traditional, forward thinking values,” she added.
• Short-term orientation means that, comparatively, the national culture likes to get things done and relies on a quick turnaround time. In a short-term oriented work environment, employees tend to change jobs more often.

Reference Sources:

1. Peng: Peng, Mike W.. Global Business. Cengage Learning. Kindle Edition.
2. What is International Business? (n.d.). https://www.internationalrelationsedu.org/what-is-international-business/
3. Mehra: Mehra, V., & Gupta, T. (n.d.). Foreign Direct Investment. https://www.academia.edu/21296780/GLOBAL_BUSINESS_FOREIGN_DIRECT_INVESTMENT_Foreign_Direct_Investment
4. FS: Pros And Cons Of Offshoring. (2019, December 6). https://fullscale.io/pros-and-cons-of-offshoring/
5. Markgraf, B. (2019, March 5). Major Trends in International Business. Retrieved from https://smallbusiness.chron.com/major-trends-international-business-60529.html
6. Fao: Chapter 4: The Legal, Political/Trade Environment. (n.d.). Retrieved from http://www.fao.org/3/w5973e/w5973e08.htm
7. IP: Heron, C. (n.d.). Business Ethics in Totalitarian Countries. Retrieved from https://ivypanda.com/essays/business-ethics-in-totalitarian-countries/
8. Economy & Trade. (n.d.). Retrieved from https://ustr.gov/issue-areas/economy-trade
9. (INPedia): Heakal, R. (2020, January 29). What Is International Trade? Retrieved from https://www.investopedia.com/insights/what-is-international-trade/
10. Notre: Understanding the 5 Dimensions of Culture with Dr. Elizabeth Tuleja. (2019, October 8). Retrieved from https://www.notredameonline.com/resources/intercultural-management/exploring-the-five-dimensions-of-culture/

The Concept of International Business: Analytical Essay

Globalization as a process is characterized by the fact that international business is developing practically in all countries of the planet and all of them depend on it. The results of this are ambiguous, on the one hand, the country enjoys all the benefits and opportunities, but on the reverse side – the payment for these opportunities and benefits is the country’s dependence on world markets. International business is viewed by the phenomenon and process of international economic relations.

1. As a phenomenon, international business is a specific form of interaction between subjects of international relations for profit and benefits.
2. From the point of view of the process – international business is a manifestation of a certain type of interaction between subjects of international relations, with the structure, their conditions, rules of conduct, and to the same results to which this interaction leads. Subjects of international relations are participants in this process who are endowed with motivation, goals and abilities to realize this in a certain sphere of international relations (individuals, companies, state organizations).

International business represents operations carried out by partners from more than one country (purchase of materials in one country and transportation to another country for further processing, and others). National business is necessary for carrying out business operations within the borders of one state, while international business can cross borders. Therefore, international business differs significantly from the national one.

The selected product is APR ECU software to make cars faster. Volksmuller is making this product and Zimbabwe is the target area where a new international business will be set up. According to the annual Doing Business rating of 2011, which estimates 183 countries of the world and ranks them for ease of doing business in these countries, Zimbabwe ranks 157th. This indicator is better than that of South Africa, Namibia, Botswana, Swaziland and Lesotho. In the rating of the ease of establishment of commercial companies, the country is on the 143rd place, so there are four major opportunities doing business in Zimbabwe.

Consumer-oriented business: Any company that enters the market to provide lifestyle and consumer products may benefit from the country’s unmet needs for many years. If the middle-class benefits from improved economic conditions and more cash income, consumer demand is likely to increase. Low-income consumers also offer lucrative opportunities.

The influx of capital may also lead to the revival of formal retailing (such as supermarkets, shopping centers) in the next few years, as its infrastructure does not need to be built from scratch. This means that consumer-oriented industries will easily gain consumer support. (Kose, and Whiteman 2003)

Technology: Mobile banking and mobile payment providers have performed particularly well in the economy due to the country’s multi-currency exchange system and the low availability of the US dollar .

Technical solutions that help accelerate the improvement of Zimbabwe’s aging infrastructure will also face high demand. At present, Zimbabweans are very good at using technological innovation to solve their daily life challenges. Any company that can provide them with practical solutions for financing, rebuilding infrastructure and mitigating power distribution issues can benefit from this environment. (Hill,2008) Rise in spin festivals – drivers drifting cars may require this software has it enhances engine performance without having to alter the engine hardware. The turbocharger was replaced with the ‘IS 38’ type for ‘ Golf R ‘, and the APR carbon fiber intake system, turbo inlet, exhaust down pipe, turbo muffler delete, custom cat back exhaust system Attached. By tune the ECU, we succeeded in demonstrating a maximum output of 350 hp and a maximum torque of 475 Nm which greatly exceeds the VR 6. It is said that this custom atlas tuned by APR is four-wheel drive. VW seems to have changed the engine of the base vehicle or retrofitted the four-wheel drive system because the US and Canada did not introduce the 4-cylinder engine and 4-wheel drive combined atlas.

For larger SUVs the better the power, the better, but the tires that convey that power to the road are also important. APR is a Toy Tire ‘Open Country M / T’ 275/55/20 size mounted on a 20 x 9-inch lightweight forged wheel. To ensure a sufficient minimum ground clearance, the suspension raised the car height 1.5 inches (about 38 mm) and said that the trailing arm of the rear was changed accordingly. In order to control the improved speed, the brake is also reinforced with a 6 piston calliper and a 350 mm large disk.

Talent: Zimbabwe has one of the most powerful education systems in Africa, so it has many highly qualified personnel, which means that companies can find local businesses relatively easily.

Why APR?

One of the popular types of engine tuning is the installation of so-called cold inlet systems designed to reduce the degree of heating of air entering the engine, in order to increase the efficiency of filling the cylinders. This has a positive effect on both the power characteristics and the reduction of fuel consumption. APR has developed several highly effective systems of cold intake made of carbon fibber. The use of innovative materials based on carbon fiber and aircraft technology in production, allowed to obtain a high-quality product with unique characteristics that significantly exceed the factory analogues.

Another feature of the design of the cold inlet system APR is the creation of additional pressure in the intake manifold from the incoming air flow. The low-resistance filter element is positioned as close as possible to this zone at the front edge of the bonnet, from where the air is drawn.

Optimization and increase in the speed of air movement is also achieved by reducing the number of bends and turns of the intake tract, which are present in the factory version. The Carbonio system simplifies the intake system by directing all incoming air streams directly to the filter.

Potential risk

International investment risk refers to the difference between the actual income and the expected value of international investment projects or the economic loss of international investment due to the existence of various uncertain factors in the specific environment and specific time.

International investment business risk refers to changes in investment economic losses due to changes in business environment, business strategy, and business decisions. risks are supposed unforeseen situations that bring unnecessary costs or other harm to enterprises engaged in foreign economic activity. (Castellani, Narula, Nguyen, Surdu, and Walker 2018).

Cultural differences are often categorized as soft factors and underestimated according to the name. Even the most patient person can, after a few years of misunderstandings, finally break the patience. Cultural differences are often known as creeping barriers to entry that, while initially relatively easy to ignore, subsequently accumulate into major difficulties. Therefore, it is usually worthwhile to choose the member country within a free trade zone, which has the most similar culture .

Logistics and its hurdles

For most of manufacturing companies, freight transport or logistics appears to be an insurmountable entry barrier. Transporting medium to heavy items by air freight to North America is a very expensive affair that is rarely worthwhile. For example, an item of the size of, for example, a hand-held lawnmower will quickly cost you 300 CAD per item, which is more than the product itself is worth, and will take three to five days to arrive at the customer.

Different from the nature of risk, it mainly includes four categories: business risk, political risk, tax risk and legal risk. When companies invest abroad, in order to succeed, they must fully consider the various risks in the investment decision-making and business operations and take effective measures to avoid them.

Business risk is the most direct and common risk

Market risk is one of the most direct risks of the most critical impact of overseas investment. The macroeconomic environment of the host country and the industry environment and industrial problems of foreign direct investment enterprises, such as overcapacity in the industry, will directly affect the success of overseas investment. Specifically, macroeconomic risks include instability in macroeconomic development, severe inflation, imbalances in international payments, exchange rate fluctuations, and interest rate risks. Among them, the risk of exchange rate fluctuation is a common risk in the economic risk of foreign investment. The typical example of the risk of exchange rate fluctuations in 1990-1993. Due to the depreciation of the ruble, the enterprises operating in Russia or Eastern Europe have become profitable and even lost.

Credit risk is one of the most common risks for companies to invest abroad. In the process of enterprises going out, it is very likely that they will seek the assistance and cooperation of local enterprises or institutions (Muzychenko 2008). Due to the lack of understanding of the credit system of the country where the investment is made, or the due diligence of the cooperative enterprises is insufficient, they often encounter dishonest cooperation. credit risk. However, once the dishonest cooperation occurs, the investment of enterprises is likely to suffer a large degree of loss, so credit risk is also a part of enterprises that need to be guarded out when going out.

Environmental risks are one of the risks that companies need to pay attention to when they go out. Outside the country, it is often the case that after enterprises invest, they need to meet the requirements of environmental protection regulations to increase investment or force the project to stop production, and the environmental protection measures adopted by enterprises in the investment production process can not reach the expectations of local people and cause protests and even losses. Different environmental protection requirements in different regions are different from the threshold. As the environmental protection threshold has increased the burden of some overseas mining investment projects, and even caused the project to stop production, such as the CITIC Group’s Western Australia magnetite project has been aggravated by local environmental requirements. The time and economic costs of the enterprise also increase the uncertainty of the project.

Talent risk is one of the risks that companies must face when investing abroad. It is also one of the biggest bottlenecks for companies to go global. From the beginning to the end of the international mergers and acquisitions, auditors and accountants are required to make assessments for the target companies. Media contacts and lobby groups are needed. This is related to the political risks of future projects and the degree of public acceptance. At the same time, whether corporate talents can have continuity, retain key talents, and accumulate experience in overseas investment is also a challenge for companies. The key to the success of these offshore businesses is finding the right people and retaining those who are experienced. companies need to have the ability to innovate, build new rules of the game, and transformative talent.

Intellectual property risks mainly include four categories: intellectual property legal risks, intellectual property barrier risks, intellectual property rights risks and intellectual property abuse risks. In the process of “rushing to the beach” in foreign markets, enterprises are in a passive position because they do not understand the intellectual property legal system of the country where they are invested. Under the background that traditional trade barriers are increasingly restricted by international treaties, countries, especially developed countries, often place obstacles on the goods, technology trade and investment involving intellectual property rights of enterprises in the name of intellectual property protection, forming intellectual property barriers and hindering them. (Daniels, Radebaugh and Sullivan2002). The overseas investment of enterprises has been smoothly carried out. In addition, in the process of hiring foreign employees, entrusting development, cooperative development or direct investment, enterprises are prone to problems such as leakage of trade secrets, resulting in foreign investment being blocked or halfway. Before “going out”, enterprises should fully assess the risks of intellectual property rights so as not to fall into the intellectual property trap. (Kose, Otrok and Whiteman 2003)

Cultural risks are often overlooked in overseas investment by companies, but this may play a key role in the success or failure of overseas investment. Overseas investment is not only reflected in the international flow of capital, but also in the exchange, integration and collision of culture. Some unhealthy cultural conflicts are likely to affect the company’s policy operations, resulting in the loss of corporate overseas investment. October 2012, one in Cambodia ‘s business managers due to the torn portrait of Cambodia Prince, causing protests and riots of the people of Cambodia, and finally the manager was arrested by the police and deported. (Picciotto, 2017).

In addition, investors have repeatedly encountered labor risks in their overseas investments. Nearly 35% of the 120 failed samples of global think tanks for companies “going out” have experienced labour problems and are likely to suffer economic losses. Therefore, enterprises need to understand the local labour situation before starting overseas investment, establish contact and trust with local trade unions, and lay the foundation for the smooth development of overseas investment. (Czinkota, Ronkainen and Moffett 2002)

Political risk is a problem that cannot be ignored

In addition to commercial risks, political risks are also an issue that cannot be avoided by every company that “goes out”. Political risks are often overlooked by companies because of their small probability and unpredictability, but once they occur, the losses faced by investors are even more serious. For example, the turmoil in the Middle East and North Africa has caused more people to pay attention to political risks. The armed conflict and civil strife in Libya are typical political risks, which have caused some investors to suffer heavy losses. (Van Tulder, R. and Van der Zwart 2005). Common political risks such as war, turmoil, nationalization, government defaults, etc. Many overseas investment projects have the characteristics of large project value and long investment cycle, which determines the importance of long-term risk management of the project. The shortage of resources and the rise of prices, the prevalence of nationalism and investment protectionism, the frequent changes of government, the unpredictable changes in policies and laws, the widening gap between the rich and the poor, the harassment of local separatists, the conflict of race, religion and ideas, The aggravation of environmental pollution and various forms of civil war have caused many overseas investment projects to face great political risks in the host country.

Conclusion

international business is viewed by the phenomenon and process of international economic relations. The new launch is APR–and location is Zimbabwe. The selected product is APR ECU software to make cars faster. Volksmuller is making this product and Zimbabwe is the target area where a new international business will be set up. According to the annual Doing Business rating of 2011, which estimates 183 countries of the world and ranks them for ease of doing business in these countries, Zimbabwe ranks 157th. The uniqueness of the product apr is protected from forgery, because each set has a unique number and comes with a holographic security sign carbonic. APR has developed several highly effective systems of cold intake made of carbon fiber. The use of innovative materials based on carbon fiber and aircraft technology in production, allowed to obtain a high-quality product with unique characteristics that significantly exceed the factory analogues

References

1. Castellani, D., Narula, R., Nguyen, Q.T., Surdu, I. and Walker, J.T. eds., 2018. Contemporary Issues in International Business: Institutions, Strategy and Performance. Springer.
2. Czinkota, M.R., Ronkainen, I.A. and Moffett, M.H., 2002. International business. Harcourt College Publishers.
3. Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P., 1998. International business: Environments and operations. Addison-Wesley.
4. Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P., 2002. Globalization and business. Prentice Hall.
5. Hoecklin, L.A., 1995. Managing cultural differences: Strategies for competitive advantage. Addison-Wesley Longman Limited.
6. McDougall, P.P., Shane, S. and Oviatt, B.M., 1994. Explaining the formation of international new ventures: The limits of theories from international business research. Journal of business venturing, 9(6), pp.469-487.
7. Hill, C., 2008. International business: Competing in the global market place. Strategic Direction, 24(9).
8. Intriligator, M., 2017. Globalisation of the World Economy: Potential Benefits and Costs and a Net Assessment. In Economics of Globalisation (pp. 85-94). Routledge.
9. Kose, M.A., Otrok, C. and Whiteman, C.H., 2003. International business cycles: World, region, and country-specific factors. american economic review, 93(4), pp.1216-1239.
10. Picciotto, S., 2017. Rights, responsibilities and regulation of international business. In Globalization and International Investment (pp. 177-198). Routledge.
11. Kobrin, S.J., 2009. Political risk: A review and reconsideration. Journal of international business studies, 10(1), pp.67-80.
12. Muzychenko, O., 2008. Cross-cultural entrepreneurial competence in identifying international business opportunities. European Management Journal, 26(6), pp.366-377.
13. Vernon, R. and Wells, L.T., 1986. The economic environment of international business. Englewood Cliffs, New Jersey: Prentice-Hall.
14. Van Tulder, R. and Van der Zwart, A., 2005. International business-society management: Linking corporate responsibility and globalization. Routledge.
15. Zahra, S.A., 2005. A theory of international new ventures: a decade of research. Journal of International Business Studies, 36(1), pp.20-28.

Expanding an Australian Business to Singapore: Opportunities and Limitations

Singapore is an island with a 5.6 million multicultural population and located at the southern tip of Malaysia. Singapore imports 90% on food consumption. This is because Singapore owns limited land available for agriculture and the people mostly depend on the external sources for agriculture products. Also, the export of agriculture products to Singapore helps for good opportunities for international products. Thus, Australian dairy company would like to expand their business in Singapore. Moreover, Singapore is the highest importer of Australian dairy that is 82,724 tonnes in 2015 and 2016. Also, Australian is a leader in food. The main objective of expanding our business to Singapore is to make comfortable for the people of Singapore. This report will highlight the country specific factors, industry specific factors, cultural factors, similarities, and differences of culture, steps for effective negotiations, Human resource management practice in Singapore, culture challenges.

Country Specific Factors

Singapore is one of the largest ports in Southeast Asia, with land area of 687 km2, water area of 10 km2 and with total population of 5,781,728. It is one of the busiest countries in the world. Singapore is consisting of one main island and other 60 small islands. The main island is surrounded by rounded hills, and the land is generally flat. The highest point of Singapore is Bukit Timah which is located at 545 ft (166 m) and the lowest point is Strait (0 m) (Andrews and Freestone, 1972).

Singapore is one of the information and technology hubs in Asia Pacific and is the regional base office of world’s top info comm multinational including Microsoft, amazon Web services and google. It is also hub to international technology startup companies. In Singapore the info comm and communication technology (ICT) sector is the enabler for all industry sector and it has helped in boosting Singapore’s industries competitiveness through rise of productivity and transforming industries processes in industries like services, manufacturing and finance. The ICT is regulated by info – Communications Media Development Authority. Singapore is also global date management hub, which connects 15 active submarine cable systems (Guile, 2003).

Singapore is a free port country and have an open economy, 99% of the goods that are brought/ imported into country are entered through country’s duty – free. On the other hand, Singapore also charges high exercise taxes on the good such as distilled spirits and wine, motor vehicles and petroleum and tobacco products for social and environmental reasons.

In Singapore, the government follows a territorial basis of taxation system. The citizens and business companies are charged based on the total sourced income they earn i.e. personal tax rate which starts at 0% and are capped at the rate of 22% for the income source above $320,000 for the residents and for non – resident they charge at flat rate of 15% (Akkemik, 2009).

For the goods and services that are imported to Singapore it is charged with goods and services Tax (GST) at the rate of 7% on the goods value i.e. it includes the cost of the goods, insurance and the freight (CIF) adding other chargeable cost and the duty payable (only if its applicable).

Industry Specific Factors

Singapore is a business oriented with strong economy and rapidly growing developed country. On 29th of June 2015 Australia and Singapore have signed bilateral trade agreement on 15 anniversaries of diplomatic relations and are member countries of the ASEAN (Australia – New Zealand Free Trade Area (AANZFTA) and TPP – 11. Furthermore, both countries government has embarked into ten year of economic plan enhance collaboration in innovation, science, research and technology (Australian Trade and Investment commission).

Singapore has been ranked highly for ease to do any or start up any business and is one of the attractive places to incorporate and started business for both local and foreign entrepreneurs. In the year 2016, the World Bank group has rated Singapore as the best country to do business. It has also received many awards for its business-friendly policies.

To incorporate business in Singapore, it is essential to focus on the target market first, it’s important to know the target customers and maximize the efforts to appeal the demographic. Strengthen the social media presence, the fastest and cheapest way to expand the business is through use of social media. The right messages can go viral in seconds. Through use of social media platforms such as Facebook, Instagram and twitter we can easily create our product awareness and engaged customers through posting relevant links, pictures, infographics and notes. While doing business it is also important to give out rewards and incentives. Giving out vouchers, discounts, cash prizes and other perks to reliable customers and employees purchasing the goods and working hard to bring the business forward.

Singapore’s competitive labor market and manpower crunch in retail industry demand for potential candidates, thus its essential to provide expatriate education and necessary trainings to ensure effective communication and business success. Expatriate trainings include language courses, cultural communication programs, and international business development.

Culture factors

Different countries will have different cultural factors where both parties give more importance to the individual culture. According to Chaney (2014), culture refers to the custom and social behavior of society. Singaporean culture is a combination of Asia, European and Middle Eastern cultures. Where Australian culture is based on western culture. Singapore is a multicultural society where people’s interactions between different races are normal. Despite, the local customs and culture Singapore are different from a mixture of different ethnic influences. Adekola and Sergi (2007), explains that different cultures believe and act differently. The business deal in Singapore is conducted in English and straightforward manners depend on different countries (Australian Trade and Investment Commission). Therefore, Australian believed in high regard in Singapore and there is no culture problem.

Religion plays an important role in people’s lives and even at work. Many multinational companies adapt their working hours as per the religion that people focus on. According to Masovic (2018), the multinational company should give more attention to religion when the company decides to open in a given country. Besides, when multinational companies operate their business, they should be aware of the religious holiday. Besides, the exporter should be aware of the product that is going to export is acceptable or not. Therefore, the product that our company going to export in Singapore is a highly acceptable and important product that the people in Singapore consume.

The diversity of languages between different countries is challenging for multinational companies. Although the English language is accepted as a universal business language, the companies should be aware of their local language where they are going to operate their business. This is because business communication will be difficult by nonverbal communication. According to Masovic (2018), multinational companies are facing difficulties by nonverbal communication because they give different meanings depending upon the countries. However, Singapore has four official languages. They are Mandarin, Malay, Tamil, and English. The foreign country will face some difficulties in the beginning because Singaporeans use Singlish to communicate. Singlish is a mix of English with other languages. After Singapore became an independent republic in 1965 English language became the main language and people speak English within their families and now, they used English as their common language. Gopal (2009), states that effective language communication with other foreign countries will help to build goodwill and growth of the business. Besides, Australian also gives more importance in English. Therefore, in terms of language expanding our business in Singapore is not a big deal because we can communicate effectively.

Cultural Similarities and Dissimilarities Between Australia and Singapore

The country Australia and Singapore shares few similar cultures, which is advantageous for exporting of diary product from Australia to Singapore particularly in cutting down the expenses. One of the common religions of both the countries are Christianity and share similar holiday times. When someone offers the business card, it should be examined carefully before placing it away and it is impolite if the card is directly put into pocket once it is presented. Both Singapore and Western Australia has equivalent time zones and can make official calls during normal hours, as it will be same time in both the countries.

Along with the culture similarities, both the countries have some differences which the diary product business should emphasis to successfully operate the business. Singaporeans are very relationship oriented in business. Australians are very straightforward in business; they do not need to build a relationship before doing business. A handshake normally serves as the appropriate greeting between two people. Singaporeans may bow slightly while shaking hands. Australian greetings are casual where a handshake and a smile is suitable.

Singaporean in order to maintain harmonious relations, they depend on indirect communication and they are more focused to posture, expression and tone of voice to get the meaning. Australians are direct in making conversations where they give importance to directness compared to diplomacy.

Singapore business dress is a long-sleeved shirt and tie for men and lightweight attire for Businesswomen. The standard dress for management level businessmen is dark suits and ties and business suits with either skirts or trousers for women.

Effective Negotiations

Different kinds of culture values exist in every country, which determine the individual’s behavior in a society. Negotiation skill plays a vital role in doing business and it is important for an entrepreneur to own that skills for effective operation of the business. In negotiation focusing on common ground is essential instead of focusing on differences. How effectively a businessman negotiates an agreement or contract for the business can influence the difference between failure and success (Kett, Szerlip & Watson, 2001).

Denniss (2004), states that for the establishment or expansion of business in Singapore, it is essential to build a long-lasting relationship with them because they are very relationship oriented when it comes to doing business. Once the relationship is developed, it is easier to get into business contract with them because building relation is critical challenge faced by people who are new to negotiation. Successful negotiation comprises of good interpersonal and communication skills, which is used together to attain a desired result. As a result, a good negotiator can close the best agreements, resulting to the progression of an organization.

Human Resource Management Practice in Singapore

Singapore is known for its laborers as steadfast, knowledgeable and dedicated workforce. The Government of Singapore has ordered laws to oversee and ensure the interests of both employees and employers. It is significant for employers to abide by the terms and conditions detailed in the employment contract. Possibly you want to draw up an agreement independent from anyone else, yet its smarter to utilize a legal counsellor or HR specialist who has the mastery to help you around there. If you are covered by the Singapore Employment Act, you should at least meet the necessities set out in the Act. When hiring a foreign worker, it is must that a valid work permit is secured as mandated by the Singapore employment act. Working rights are mentioned in the permit. Singapore has them all: assorted ethnicity, different ages and sexual characters. The Government supports reasonable and dynamic HR rehearses among recruiting specialists.

Cultural Challenges

Australia is a low power distance country while Singapore is a high-power distance. High power distance people believe in power and authority as fact of life. They consider that people are not equal in this world. According to Tan and Chong (n.d), leaders are the sole decision makers and subordinates must follow them without conflict. Thus, the subordinates should accept the instruction given by their leaders. On the other hand, low power distance countries prefer consultation within subordinates and managers. They openly work towards resolving disputes stating their own reasons and come to a satisfactory conclusion. Leaders encourage independent thoughts and contributions to coming to a satisfactory conclusion.

People from Singapore likes to start the work late in the morning and stay up late night in the office whereas in Australia, people start their office early and go back home to spend time with their family.

When it comes to socialising and food, Australians would base the event around Friday afternoon over few drinks. Food also plays a huge social role within the company. But in Singapore, everyone stops for an hour to socialise over food. Since it is a multicultural country, employees bring food from there nationality and people gather, socialise and get to know each other outside of team meeting.

In Singapore, employees are paid on a monthly basis whereas in Australia, you will get your wage weekly (every week), or once in 2 weeks (fortnightly). Thus, the employee that we hire from Australia to work in Singapore will have difficulty in adjusting their salary. This is because the Australian worker they don’t have habit of receiving money monthly. We choose to expand Australian Diary Company to Singapore because of its ideal location for global business, strong trade and investment makes Singapore the most competitive and the world’s easiest place to do business. Also, Singapore has a free trade agreement.

References

1. Adekola, A., & Sergi, B. S. (2007). Global Business Management-A Cross-Cultural Perspective.
2. Akkemik, K. (2009). Industrial development in east asia : A comparative look at japan, korea, taiwan, and singapore (Series on economic development and growth, v. 3). New Jersey: World Scientific. (2009).
3. Andrews, R., & Freestone, C. (1972). A geography of indonesia, malaysia, singapore (2nd ed. (rev. and enl.) ed.). Hawthorn Vic.: G. Philip & O’Neil.
4. Chaney, L. (2014). Intercultural business communication (Pearson new international edition, Sixth ed.). Pearson.
5. Denniss, R. (2004). Paid annual leave in Australia: An analysis of actual and desired entitlements. Labour & Industry: A Journal of the Social and Economic Relations of Work, 15(1), 1-16. doi:10.1080/10301763.2004.10669301.
6. Gopal, N. (2009). Business communication. New Delhi: New Age International. (2009).
7. Guile, M. (2003). Culture in singapore. Port Melbourne, Vic.: Heinemann Library.
8. Kett, A., Szerlip, B., & Watson, T. (2001). Passport Singapore: Your pocket guide to Singaporean business, customs and etiquette. Novato: World Trade Press. (2001).
9. Masovic. A. (2018). socio-cultural factors and their impact on the performance of multinational companies. Volum 7 issue 14.
10. Tan, W., & Chong, E. (n.d). International Journal of Project Management. Power distance in Singapore construction organizations.
11. https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Singapore/Doing-business
12. https://www.austrade.gov.au/australian/export
13. https://culturalatlas.sbs.com.au/singaporean-culture/singaporean-culture-business-culture#singaporean-culture-business-culture
14. https://www.todaytranslations.com/consultancy-services/business-culture-and-etiquette/doing-business-in-australia/
15. https://www.worldbusinessculture.com/country-profiles/australia/culture/business-dress-code/

Current International Trends in the Outsourcing Process

Introduction

This research ought to identify the current International trends in the outsourcing process along with its various subsets. The reason why the BPO industry is progressing and expanding is due to Innovation, technological advancement, and competition internationally. Increasing competitiveness from new outsourcing destinations along with the pressure on businesses to operate cost-efficiently is the driving force that this sector is accelerating. The work of the service providers of Business Outsourcing is to utilize new technological advances to face challenges in the market meritoriously, goods and services enhancement, cope effectively with talent shortages and keep operating costs minimum. Moving ahead, the industry is undoubtedly delivering positive results regarding market growth and reduction in regulations.

The Current Trends that will be emerging in a few years:

1. Innovative Technologies are Emerging- Emphasis on Automating the process, Focus on Social Media Management Tools, Investments in Cloud Computing
2. Multitasking to surmount talent shortage- The term BPO was linked with call centers some years back. This obsolete concept is now substituted with human resources, accounting, coding, web designing, etc. A large number of BPO companies are investing in innovative technologies in the companies that are supplying them.
3. Startups becoming BPO Customers- Since the amount of money to appoint talented professionals is less with small-level businesses, they often look overseas for cost-effective labor. Companies like Slack, Klout, and AppSumo used the talent outsourcing model to construct effective business plans. Both BPOs and Startups have developed interdependency and such a trend is going to be much more noticeable in 2019. To provide talented staff at lower costs Startups are depending upon BPOs, to carry out various tasks such as trading and recruitment. However, this again benefits the BPOs in enhancing work quality, working on new technologies, and generating larger profits.
4. Sustained development in the Topmost countries that are Outsourcing- India, Malaysia, Philippines
5. Fresh Destinations identified for Outsourcing that Emerging in 2019- Bulgaria, Romania, Egypt, Mexico,

Colombia

The Body of the Article

In the current scenario, the Companies are opting for outsourcing their businesses by contracting their operations and responsibilities of business functions that are non-primary to the third-party service provider. Outsourcing is important for every business, regardless of its size or location. It includes various procedures like transaction processing, data conversion services, data entry services, product data entry, e-book data entry services, inventory management, web research, etc. Outsourcing guarantees transparency at a higher level which is required by businesses to keep their clients happy. Outsourcing is a function that syndicates the investing, logistics, contract management, and their complexities.

Outsourcing is viewed as involving the contracting out of a business function – commonly one previously performed in-house- to an external provider. Offshoring is the act of outsourcing a function to a foreign country while retaining ownership. Outsourcing will allow a company to more effectively utilize its assets by allowing its labor force to focus on their core competencies, whether they be manufacturing, design, or consulting, and outsource those functions which are not to another company that has already proven to be an industry leader, such as information technology, end-user support, accounting or data management

Outsourcing helps agencies reduce expenses. The responsibilities of the company are outsourced to an already established enterprise with all the resources, and the problems of hiring and education is prevented. It helps the company to Focus on Core Business. It leads to better employee productivity and allows them to make better and greater informed business decisions. Buying an authorized version of the latest software and other technologies may be very costly that’s why with outsourcing that can be saved and they can get access to the latest updated technology. The BPO industry has provided employment to loads of proficient kids and has unmarried-handily modified the GDP of diverse small international locations.

This research has discussed best practices for companies choosing to outsource which were:

1) Determine the business’s core competency and non-essential business functions for outsourcing, 2) Identify potential outsourcers and initiate trial contracts, 3) Evaluate vendor’s performance, 4) Continue partnership with close oversight and feedback channels. However, it hasn’t addressed changes occurring on a global scale. At the turn of the century when companies outsourced or offshored to a foreign country, there were only two major destinations; China and India. Over the last decade, several new players have entered the global market as major players e.g. Philippines, Malaysia, Columbia, Poland, Malaysia, and Costa Rica. These new markets for outsourcing/offshoring activity fall into three categories, 1) Business Process Outsourcing, 2) Research & Development outsourcing, and 3) Production outsourcing.

Business Process Outsourcing: this is a subset of outsourcing that involves the contracting of the operations and responsibilities of back office business functions (or processes) to a third-party service provider. These can entail customer support, human resource, or accounting activities. It is primarily used to refer to the outsourcing of business processing services to an outside firm, replacing in-house services with labor from an outside firm. Comparative Advantage: the ability of an individual or group to carry out an economic activity, such as production, at a lower cost and more efficiently than another entity. Core Competencies: activities or practices, such as product development, determined by a company as critical to its long-term success and growth. Core competencies are typically based on skill or knowledge sets rather than products or functions. They provide a return on investment and act as a barrier for other companies trying to enter a particular market. Many manufacturers choose to focus on core competencies and outsource production, or activity-based, tasks. Many OEMs decide to keep their high-level engineering and design work as internal competencies, particularly as these might apply to new products and highly complex products.

Home Shoring: also known as home sourcing, is the transfer of service industry jobs to electronically connected home-based employees. Home shoring is essentially turning office jobs into work-at-home jobs. Home shoring may or may not involve outsourcing, which is contracting for work to be done by a third party outside the company. If a company employs its own home-based workers, then home shoring is not outsourcing. Offshoring: shifting a business function from one country to another. For a business, this can entail moving product manufacturing, service centers or operations to a different country. Offshoring is often used to reduce the cost of business, with the company seeking to move parts of operations to countries with more favorable economic conditions. Outsourcing: often viewed as involving the contraction out of a business function – commonly one previously performed in-house – to an external provider. In this sense, two organizations may enter into a contractual agreement involving an exchange of service and payments.

Production Outsourcing: is a subset of outsourcing that involves the contracting of the operations and responsibilities of manufacturing business functions (or processes) to a third-party service provider. These can entail customer support, human resource, or accounting activities. It is primarily used to refer to the outsourcing of business processing services to an outside firm, replacing in-house services with labor from an outside firm.

Research & Development Outsourcing: is a subset of outsourcing that involves the contracting of the operations and responsibilities of research and development business functions (or processes) to a third-party service provider. These can entail customer support, human resource, or accounting activities. It is primarily used to refer to the outsourcing of business processing services to an outside firm, replacing in-house services with labor from an outside firm.

Trends in Business Process Outsourcing

Business Process Outsourcing is defined as activities that are instrumental to an effective business model but are often in a support role to the business’s core competency. Examples are human resource management, payroll, and general accounting, as well as the commonplace IT and customer support functions in the form of call centers. The shift in business process outsourcing, that is non-manufacturing or research and development jobs, from India to the Philippines may have been influenced by the affinity between Filipino culture and Western culture. However, to assume this is the sole driving force behind such a massive shift in jobs and resources would be premature and incorrect. India has become saturated with business process outsourcing and has naturally progressed economically as its labor market matures. The Indian labor force has developed a competitive workforce that is able to handle more complex and critical functions that demand a higher wage. The Philippines offers a similarly attractive business environment for business support functions as India, but due to the recent entrance of the Filipino labor force, has not had the same labor cost increases as popular outsourcing destinations such as in India. As demand increases for such services, the cost of such labor supply will increase, leading to an increased cost of outsourcing of business process functions, like in India’s labor market. This maturation of the Indian labor force can be seen in its solid grasp as the number one destination for research and development research, typically large software development research, almost double the number of outsourced jobs as the runner-up, in the United States. India was not alone in its maturation of the labor force. China, which was once considered to be mere ‘the world’s factory, has seen its labor force develop not into Research & Development like India, but into the services industry. China is now the 5th ranking destination for business support services just behind Poland, a rise from the 13th position in 2008.

In addition to maturing labor forces driving business process outsourcing from well-established countries like India, a historical reversal of Shared Services Center from large campuses into more agile and competitive specialized centers. Previously offshoring or foreign outsourcing companies would house various business functions under the same roof. This means that human resource, accounting, and call centers would be located on the same campus. However, companies now are ready to embrace the opportunities offered by different locations to take advantage of the skills and costs found in different labor markets. This has resulted in a more decentralized outsourcing/offshoring practice as a labor force demonstrated its core competency.

Top ranking destination countries by estimated jobs in business support services – 2009(08)

Trends in R&D Outsourcing

The global trends in Research & Development outsourcing have seen a decline due to the inherent nature of R&D research. R&D activities are typically investments with a long pay-back period. Because of this characteristic, companies put holds on longer-term investments until they are confident in a sustainable economic recovery. Companies seeking to reduce their uncertainty risk have scaled back their R&D research in foreign countries. India is still the number one destination in 2009, but the U.S. has seen a surge, rising from sixth place in 2008 to second place in 2009. It is important to note that only stand-alone R&D activities were looked at in, and on-site R&D to support local production was not accounted for. Similarly, to the production sector trend, during times of economic uncertainty companies who outsource choose to do so closer to home or in more secure markets. This was a contributing factor to why the U.S. jumped up from sixth to second place in the rankings of top destinations for stand-alone R&D jobs. This risk aversion applies to any business function that requires large capital outlays. For Research & Development research, this requires a large initial investment of capital with potentially no return.

Top ranking destination countries by estimated jobs in R&D – 2009(08)

Trends in Production Outsourcing

In contrast to the business services sector of outsourcing, which saw remarkably healthy growth, production outsourcing suffered further decreases in 2009 compared to 2008. This was not surprising as new investment in production typically only precedes anticipated market growth. What we see is that in the BRIC countries (Brazil, Russia, India, and China), the decline was the most pronounced. This is in contrast to the U.S. and Mexico, which saw an increase in production investment in terms of jobs. Mexico was a very attractive destination, nearly on par in 2009 with China, and behind the number one ranked US. This can be interpreted as outsourcers, during times of uncertainty, shifting away from developing/emerging markets like the BRIC countries towards the Organization for Economic Co-operation and Development (OECD) member countries. The OECD contains such countries as Mexico, France, Germany, the United States, the United Kingdom, and Japan, which are perceived to be more stable for investment. These trends support the notion that during times of economic pressure, investment is placed into safe, predictable markets like the United States and countries that are intimately connected to them, like Mexico.

Top ranking destination countries by estimated jobs in production – 2009(08)

This chart below from a 2010 study surveying over 700 Chief Human Resource Officers shows that outsourcing and offshoring are still very pertinent topics with no signs of decreased outsourcing/offshoring activity.

New Phenomena: Home Shoring

Home Shoring is a new emergent form of outsourcing. Home Shoring sometimes referred to as home sourcing is best thought of as a combination of outsourcing and telecommuting. Home Shoring activities typically fall under the business process outsourcing sector. Home Shoring, which seeks decentralization of business activities in order to take advantage of different geography’s local labor talents and costs, follows a trend identified in the business process sector. It has major advantages over traditional business process outsourcing that stem from improved global communications networks. Home Shoring workers are based out of their own homes, and often supply their own computing and telephone networks, reducing the carrying cost of office space. This meant that Home Shoring for business allows companies to bypass many of the fixed costs that still plague offshoring and outsourcing. Stephen Loynd, a telecommunications analyst for IDC, of Framingham, Massachusetts said ‘the whole pie for outsourcing is growing, that means more work will be offshored but at the same time there will be more work that’s home shored.’ The virtual call centers that Home Shoring can provide by linking independent, geographically diverse, low-cost services are extremely attractive to companies

Sustained growth in Top Outsourcing countries-

1. India

The occurrence of new job roles such as mobile app development, cybersecurity, data science, and social media has made the economy’s dependence on call centers quite less. Robotic process automation (RPA) has started taking over jobs that are simple. Predicting the growth of RPA, the Indian BPO sector is re-skilling its workforce. NASSCOM believes that up till 40 percent of India’s IT-BPO staff will be enhancing their skill set over the succeeding five years. Upcoming skills anticipated to be in great demand consists of artificial intelligence, robotics, machine learning, and big data analytics.

2. Malaysia

BPO in the coming years will surmount Information technology outsourcing (ITO). The reason is the increasing interest of investors in Malaysia’s shared services market and thus, it will require domestic industries to be speedily accustomed to this demand.

3. the Philippines

The occurrence of the KPO (Knowledge Process Outsourcing) sector post BPO could cater to new demands of clients and provide more specialized activities like market research, equity research, web design, etc. Making it to be a sector to be looking forward to in the Philippines in 2019.

New Outsourcing Destinations Emerging in 2019-

1. Bulgaria

Bulgaria’s growth as a BPO nation is owed to Having the lowest salary amongst EU nations of around 235.62 Euros per month. Availability of workers speaking all major European languages. Having a large talent pool of developers with deep technical expertise.

2. Romania

Romania’s growth as a BPO nation is owed to the Fastest internet connection among EU countries. 54% of graduates have a background in science and technology. It has the second lowest salary of around 321.17 Euros per month

3. Egypt

Egypt’s growth as a BPO nation is owed to Government offering tax incentives to outsourcing businesses. Booming infrastructure including Silicon Waha’s technology parks. Skilled labor well-versed in European languages such as French, German, and English.

4. Mexico

Mexico’s growth as a BPO nation is owed to its proximity to Silicon Valley. The huge talent pool of around 500,000 IT professionals working in the BPO sector. Political and economic Stability.

5. Colombia

Colombia’s growth as a BPO nation is owed to Government sponsored technical training. Minor time zone differences between US/Mexico. Investment growth due to depreciation of the peso.

Essay on Business

Whether you are just starting a business, or have been operating one for years, understanding the basic concepts of business is essential. Knowing the key terms and ideas within the business world can help you make informed decisions and increase your chances of success. Here, we will discuss why understanding business concepts is so important and how it can help you succeed in the corporate world.

Why Understanding Business Concepts is Essential

Knowledge is Power

The importance of having a deep understanding of the fundamental principles of business cannot be understated. Having an intimate knowledge of basic business concepts gives you the power to make informed decisions that can maximize profits, minimize risk, and ensure that your organization runs smoothly. This knowledge can be applied to almost any problem or situation that might arise within your company.

Make Smart Decisions

With a solid understanding of the fundamentals of business, you can make smart decisions about everything from product development to marketing campaigns. You’ll be able to identify potential problems before they become too serious and take steps to fix them quickly and efficiently. You’ll also have access to valuable data, such as customer feedback, which will help you understand what products or services people want most and how best to deliver them.

Understand the Big Picture

By understanding basic business concepts, you’ll gain insight into how all aspects of your organization work together to create a successful end result. This includes recognizing when specific departments need more resources or support for them to do their jobs effectively, as well as when changes need to be made for everyone involved in the project or task at hand to succeed. Knowing this information allows you to create strategies that will benefit all parts of your organization, rather than just one specific area.

Business Law and Regulations

Business law and regulations are essential to understand in order to run a successful business. They can help you avoid costly mistakes, such as not paying your employees properly or not complying with food safety laws.

Running a successful business always involves staying up to date on local, state, and federal laws pertaining to your industry. Ignorance of the law is not an excuse when running a successful operation; ignorance could land you in hot water with government agencies such as the IRS or FTC.

The law is an essential part of any business. You have to know what it says if you’re going to run a successful business. There are laws about everything from how you pay your employees to how much you pay them, from what you can and cannot do with the products that you sell to how you advertise them.

You have to understand the basics of business law and regulations to ensure that your business is operating within the legal framework. If you don’t know something, find out. You don’t need to memorize every law and regulation on the books, but it’s crucial for you to understand what they are and how they affect your business.

Adaptability

Businesses must be able to adapt in order for them to survive long-term; this means having an understanding of industry trends as well as being able to adjust when necessary. Staying current on the news related to your industry can help keep you ahead of the curve when it comes time for adjustments, or if you need fresh ideas for growth opportunities or improvements in customer service protocols.

Additionally, being informed about changes in technology can help ensure that your business isn’t left behind as new innovations become available or certain processes become obsolete due to advances in automation or artificial intelligence (AI).

Conclusion

Having a solid understanding of fundamental business concepts is essential if you want your venture to be successful long-term. This means learning about common topics such as cash flow management, marketing strategies, customer service techniques, applicable laws and regulations related to your industry. More importantly — staying up-to-date with news related to your field so that you may be better prepared for unexpected changes down the line. By familiarizing yourself with these core principles now, you’ll set yourself up for success later on down the road!

Essay on Business

Whether you are just starting a business, or have been operating one for years, understanding the basic concepts of business is essential. Knowing the key terms and ideas within the business world can help you make informed decisions and increase your chances of success. Here, we will discuss why understanding business concepts is so important and how it can help you succeed in the corporate world.

Why Understanding Business Concepts is Essential

Knowledge is Power

The importance of having a deep understanding of the fundamental principles of business cannot be understated. Having an intimate knowledge of basic business concepts gives you the power to make informed decisions that can maximize profits, minimize risk, and ensure that your organization runs smoothly. This knowledge can be applied to almost any problem or situation that might arise within your company.

Make Smart Decisions

With a solid understanding of the fundamentals of business, you can make smart decisions about everything from product development to marketing campaigns. You’ll be able to identify potential problems before they become too serious and take steps to fix them quickly and efficiently. You’ll also have access to valuable data, such as customer feedback, which will help you understand what products or services people want most and how best to deliver them.

Understand the Big Picture

By understanding basic business concepts, you’ll gain insight into how all aspects of your organization work together to create a successful end result. This includes recognizing when specific departments need more resources or support for them to do their jobs effectively, as well as when changes need to be made for everyone involved in the project or task at hand to succeed. Knowing this information allows you to create strategies that will benefit all parts of your organization, rather than just one specific area.

Business Law and Regulations

Business law and regulations are essential to understand in order to run a successful business. They can help you avoid costly mistakes, such as not paying your employees properly or not complying with food safety laws.

Running a successful business always involves staying up to date on local, state, and federal laws pertaining to your industry. Ignorance of the law is not an excuse when running a successful operation; ignorance could land you in hot water with government agencies such as the IRS or FTC.

The law is an essential part of any business. You have to know what it says if you’re going to run a successful business. There are laws about everything from how you pay your employees to how much you pay them, from what you can and cannot do with the products that you sell to how you advertise them.

You have to understand the basics of business law and regulations to ensure that your business is operating within the legal framework. If you don’t know something, find out. You don’t need to memorize every law and regulation on the books, but it’s crucial for you to understand what they are and how they affect your business.

Adaptability

Businesses must be able to adapt in order for them to survive long-term; this means having an understanding of industry trends as well as being able to adjust when necessary. Staying current on the news related to your industry can help keep you ahead of the curve when it comes time for adjustments, or if you need fresh ideas for growth opportunities or improvements in customer service protocols.

Additionally, being informed about changes in technology can help ensure that your business isn’t left behind as new innovations become available or certain processes become obsolete due to advances in automation or artificial intelligence (AI).

Conclusion

Having a solid understanding of fundamental business concepts is essential if you want your venture to be successful long-term. This means learning about common topics such as cash flow management, marketing strategies, customer service techniques, applicable laws and regulations related to your industry. More importantly — staying up-to-date with news related to your field so that you may be better prepared for unexpected changes down the line. By familiarizing yourself with these core principles now, you’ll set yourself up for success later on down the road!