Page 432 - Encyclopedia of Business and Finance

eobf_I 7/5/06 3:04 PM Page 409

International Business

the areas of communication, technology, and manage- country. Importing is the act of a buyer in one country
ment. buying goods and services from an exporting organization
IAAP continues to be an outstanding and unique in another country.
resource in meeting the needs of administrative profes- For example, when an individual organization in
sionals by providing diversified opportunities limited only
Country A sells goods to a buyer in Country B, the Coun-
by the individual member’s motivation and quest for try A seller would receive the proceeds from the sale to
excellence in the profession.
Company B, just as in a domestic sale between two com-
The IAAP may be contacted at 10502 NW Ambas-
panies within the same borders.
sador Drive, PO Box 20404, Kansas City, MO 64195-
0404; or http://www.iaap-hq.org. The amount of the proceeds from the sale would be
the amount agreed upon by the two companies, less any
SEE ALSO Careers in Management
expenses incurred by Country A, the exporter. To calcu-
late the annual income, however, it is necessary to calcu-
Dorothy A. Maxwell late the balance of payments for a stipulated time, such as
a month or years. The balance of payments may include
gold, merchandise costs, services costs, interest and divi-
dend payments, travelers’ expenditures, and loan repay-
INTERNATIONAL ments.
BUSINESS Usually, trade between two countries does not involve

International business consists of transactions that are ownership interest in the other nation’s business firm.
developed and carried out across two or more interna- Occasionally, however, one of the trading nations makes a
tional borders to satisfy the business objectives of individ- foreign direct investment in the other nation’s trading
uals and organizations. Technology has created
firm with whom they are doing business.
opportunities for business internationally in ways that
A list of the items typically imported by the United
make boundaries of countries seamless in transacting busi-
ness at the click of a computer. States would include machinery, transport equipment,
manufactured articles, crude materials, chemicals, food
and live animals, minerals and lubricants, beverages, and
MAJOR FACTORS AFFECTING THE
tobacco.
GROWTH OF INTERNATIONAL
BUSINESS In addition, almost all countries appear to have a
International business has experienced an unusually need for engaging in international business. The major
strong growth pattern since 2004. Several major factors reason lies in the need to acquire sufficient quantities of
are involved in this growth. One major factor deals with needed commodities in order to have a healthy balance of
the surge in oil prices, a commodity in great demand by needed items available. Virtually no country can produce
many nations. enough of every kind of material it needs by itself. So, if
Another major factor affecting the growth of interna- Country A has plenty of a certain kind of raw material, it
tional business has been the expansion of technology. can trade it to Country B in exchange for Country B’s
Computers and all their applications have deeply pene- manufacturing capacity and know-how, which Country B
trated international business, and using the Internet as an
can trade to Country A, sometimes at lower prices.
integral tool of communication has been paramount in
promoting diversified international business opportuni- Shortly after the 2004 U.S. presidential election, the
ties. value of the U.S. dollar went down. The reduced value,
however, made U.S. prices abroad more attractive to buy-
A third major factor has been the decline in the value
ers throughout the world. The United States began expe-
of the U.S. dollar. When prices are lower for U.S. goods,
other nations rush to take advantage of the bargain prices. riencing a serious trade deficit. It is worthy of taking note
that capital-intensive products (such as cars, trucks, con-
struction equipment, and industrial machinery) are man-
EXPORTING AND IMPORTING
ufactured by countries with a strong industrial base.
The primary activities that take place in international
business transactions are exporting and importing. Labor-intensive products (such as shoes and clothing)
Exporting is the act of an individual or business in one are made in countries with low labor costs and relatively
country selling goods and services to a buyer in another modern productive plants, often found in Asian countries.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 409