International Business and Multinational Enterprise

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The essay highlights the international business and its scope in the multinational enterprise. British Petroleum is a leading multinational enterprise which is serving in the global market. The easy focuses on the importance of trade practises i.e. import and export of goods and services in the economy. Exports and imports of products and services brings various opportunists and threats for British Petroleum. The company is dealing in production and refining oil and gas and exporting it to various host counties in the world. The strategic goals of company are formulate\d to meet the demands of imports and exports figures, which the company aims to achieve.

The current essay focuses on international business in relation of export and import as operations in multinational enterprise. International business refers to a business that operate in more then one country. This type of business involves transactions of goods and services through import and export in the international borders of an country. Proceedings in international business is conducted all around the worlds (Girod and Bellin, 2011). These business transactions include the transfer of technology, innovation, goods and services  i.e. import and export. International business reckons giving licence to the business for producing goods and services in the host country. Managerial and all the business services regulated by the business is provided to the international business as well. International business of any company is generally affected by the economic development of the host country, monetary policies, cultural and political significance (Banalieva and et.al., 2015). Apart from these factors market forces, suppliers, transport, advertising and research affects the business of the company in international borders. International business is performed by multinational enterprise which are globally established for production of goods and services (Buckley, 2014). 

A multinational enterprise is a company that operates in the worldwide. MNE's approach to the business is retrospective with the import and export policies followed in the host country. Multinational enterprise has a global philosophical concept towards the productions and operation of the goods and services. MNE requires to make investment in the foreign market with the help of buying and selling functions of business in the host country (Andersen, 2011). MNE's structure is maintained by the forces of the international market and the regulation of the company itself. Import and export by multinational enterprise in international helps the company to increase its efficiency and proficiency. Global business aspect helps the company to cater to new market and customers needs. International business helps the MNE to build its brand image and goodwill in the host country as well (Rugman, 2014). MNE's helps to provide employment in the host country which improves the reputation of the company in the host market. International business increases choices for an MNE by providing a wide scope of export and import of goods and services to various exponential markets. For analysis of export and import in multinational enterprises British Petroleum is referred in the essay.

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British Petroleum is also referred as BP for its worldwide operation in petroleum industry.  BP is among the leading oil and gas company in the world. The company deals in refining, producing, exploring and distributing its oil and gas products to various countries. British petroleum operates in more then 80 countries of the world which includes Mexico, US, Brazil, Russia, Azerbaijan, Africa, etc. UK exports of oil and gas have been more than of $40 billion a year (Smith, 2014). BP aims to provide quality and technology advanced services to its customers of international countries. British petroleum respects the cultural values of international country it deals. It generate excellence towards its products and services to generate maximum customer satisfaction. British petroleum operates in the global market by exporting and importing goods and services which it produces (Quyen and Nguyen, 2011).

Export is referred to the sending of various goods and services to an international country for trading and selling. Export is considered as the function of international business where goods and services of a company are sold in international borders. Export is also mentioned as a economic transfer  because of the trade of large scale productions that occurs between two country (Wei and et.al., 2012). Export raise the economic development and growth of the country in the international due to sale and generation of revenue in the host country. Export can only be done by abiding the foreign trade policies and export regulation formulated by the government of UK. Export is important to the countries economic growth.

Advantages of export

Export serves various advantages to the economy of the country. The major advantage of export is on the technological area of the country. British Petroleum is facilitated with the transfer of technology and innovation from the homeland to the host country. The host country is in deep advantage of rising technological advantages that it gets from the the MNE (Buckley and Boddewyn, 2015). Employment also raises in the host country as the British Petroleum expands its business in the host country. Rise in employment in the host country improves the economy of the country. The host country provides resources to the British Petroleum and in return is facilitated with the rise in employment generation. Employment generation helps in increasing the talent of the host country, this phenomenon also helps to brain drain excellent and proficient human resource to the home country (Czinkota and et.al., 2009). As the British Petroleum establish its business in an host country it invests a  high amount of financial resources in the host country. Expansion and establishment of British Petroleum requires a lot of financial support thus the multinational business expects high return on investments. International business helps the business in generating return on investment which improves British Petroleum and the home countries economy of scale (Piekkari and Tietze, 2011). The investment in setting up of business in a host country is a direct source of income generation for the home country as well. Direct flow of income will thus generate sources of capital for British Petroleum. These sources are a direct source of export promotion. Export promotion is facilitated along with the export of goods and services to the host country. Export promotion happens due to exporting production services to other countries.   The capital investment from British Petroleum is a funding source for the country. This type of external investment in the host country also facilitates the current account deficient of the respective host country (Yang and Chen, 2014). The current account deficient of UK will be improved by the export services provided by British Petroleum. Export promotes the economic development and growth of UK. It also improves the brand imaged of country in the host countries and other international. Exports brings sales and goodwill to British Petroleum as it has a global outreach for its product. Export growth also raises the internal trade practices followed in the country. As external and internal trade raises it bring stability in the economic conditions of UK (Dunning, 2012). Economic stability generates growth and development in the country. As economic stability is closely related with the distribution of income and wealth , the country can see the advantage of export towards the rate of income generation in the country (Our strategy, 2015).

Disadvantages of export

With great advantages comes disadvantages that hampers the growth potential of export practices in the country. British Petroleum expansion and establishment is expensive as setting up of business in the global territory requires huge amount of financial support. The energy and resources in this process are overly utilised. British Petroleum requires more energy and time in setting up export procedures and policies this impacts the current business cycle of the company. There is a huge risk in the global market (Chang, Witteloostuijn and Eden, 2010). Large number of competitors are available to compete in various other countries. Export bring great uncertainty for the success of British Petroleum in the new host country. Export practices require great human power for the successful conduct of the export plan (Mott, 2015). This may create a backlog of employees for the company. Hiring and recruitment of candidates in host country is a responsible task. As culture, values and education of the host country will defer from the home country. British Petroleum find it difficult to adjust to the requirement of talented human personnels for the company. Research of the target customer base for the home country is a tedious task for British Petroleum (Killing, 2012). The customers may not respond well enough for the company. The responsibility to handle all the global logistics regarding business is a tiresome task for the management of the company. Apart from export British Petroleum also focuses on importing raw material for production of various products.

Import is the procurement of goods and services from international borders or other countries. Import consists of change of ownership of goods and services from a resident company to a non resident company. An export for an sending country is import for an receiving country. As per international trade practices there are few restriction on free impart. The import of goods and services are subject to jurisdiction as per the international trade agreements.

Advantages of Import

Import provides competitive advantage over the price of goods. Importing helps  British Petroleum to lower the prices of goods. Import of raw material for production in oil and gas plant helps to reduce the price of goods. As raw material requirement of  British Petroleum is duly fulfilled by the import from other countries. This also generates a competitive advantages for the company in the global market by eliminating various competitors from the race. Importing also helps to generate awareness about various advancement in technology used by the countries. Importing provides research facilities to  British Petroleum, by cognizance of various factors of the exporting country. Importing also eases to the availability exclusive resources and quality products that are produced by the exporting country only (Benefits Of Imports, 2015). This is the major benefit of importing foods from the other country. Importing generate access to unique resources and products available in the global market. Import provides employment to the transport industry of the host country. Various shipping and airline companies make sure to responsibly abide by the remote engagement of products and services (Beamish, 2013).

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Disadvantages of Import

The fluctuation in the foreign exchange rate of the company generates greatest disadvantage for British Petroleum. The sudden change in the exchange rates poses greater loss for  British Petroleum.  Difference of beliefs and culture significance poses great disfavour to the business of  British Petroleum. These differences cannot be eliminated but they generally effect the import practices of the country. The restriction of the host country on the products and goods generate issues for British Petroleum. The political system of any host country regulates the minimum amount or number of goods and services which can be exported. Thus this lessens the opportunity of getting various resources which the importing country is unable to generate or produce. Hostility and inappropriate relationship among the importing and exporting country may restrict the trade practices which directly effects the profitability of  British Petroleum.

Corporate Strategy

Export and import transactions of British Petroleum serve best corporate strategy which is helpful in raising scope and providing direction for the corporation to conduct business in the global market. A corporate strategy is formulated to achieve the goals of the company. Wild, Wild and Han, 2014 has concluded that “the formulation of corporate strategies in regards to  British Petroleum helps the later to ascertain the market position of the company and the present and for the future references well (Wild, Wild and Han, 2014)” .  British Petroleum's strategy to eliminate competition from its scope is evident from the export and import.  These trade practices help company to achieve the global expansion goals by sending and receiving goods and services from various country.

British Petroleum have generated safe and reliable operational strategy. The company focuses  on discipline and excellence in its strategic planning. Whereas Rugman and Collinson, 2009 said that “reports of accidents related to safety of employees have been proving hazardous to the companies position in the market (Rugman and Collinson, 2009)”. As a part of oil and gas industry there is a huge risk of safety in the refining and production of products of British Petroleum. These operations help the company in proper trade of its product in other countries. British Petroleum abides by the various rules and regulation formulated by international trade practices. British Petroleum wants to perform its operations in an disciplined and safe format. The company wants to safeguard the employees from various occupational hazard that the employee face as a part of oil and gas industry. On the other hand  Smith, 2014, found that “the company is facing backlash for not following various trade practices which is necessary to be followed by the company (Smith, 2014)”. Disregarding trade practices and international laws hampers the growth and image of company towards its customers. The consumer may not rely on the products and services produced by the company. This practice also generate criticism and exploits negative image of company in the media of international borders.

British Petroleum has generate research oriented strategy of quality portfolio. Under this strategy the company relies on the resources of the other countries which export their products and services to  British Petroleum. To reduce the impact of this As per Alexander and Doherty, 2009 “British Petroleum has explored about the coal reserves in the entire world (Alexander and Doherty, 2009)” . These research skill of the company has generate a strategy of quality portfolio. Under this strategy the company relies on the resources of the other countries which export their products and services to  British Petroleum. Import and export of coal, oil and gas has generated a wide range of high quality business.  On the contrary, Killing, 2012 highlights that this exploration has also hampered and exploited reserves and resources of various host countries. These countries are depleting in oil and gas reserves. To deal with this situation British petroleum is trying its very best to explore various new stream of reserves that will help the company to commend its operations in a new market (Killing, 2012). According to Beamish, 2013 “Import and export provides distinctive capabilities to  British Petroleum (Beamish, 2013)” . As import and export practices builds strong relationship with the various host country in which  British Petroleum is operating its business. The company also receives various technological advancement which provide expertise to the company in upgrading its informational technology department. Moreover of the advantages Wild, Wild and Han, 2014 says that “the company is facing the risk of piracy and violation activities against its data and technology (Wild, Wild and Han, 2014)”. The experts are dealing to develop various software's that can help them to deal with this critical situation that directly affect the existence of the company in international market.

British Petroleum another major strategy is to raise production capacity and to maintain the quality of goods and services. From point of view Buckley, 2012 “the company focuses t generate the most value in its products by increasing production side by side (Buckley, 2012)”. The company wants to strength its portfolio by up-streaming the assets and down-streaming the competition business. To this quote, Andersen, 2011 suggests that “ this habit of company will trim down  the quality of products (Andersen, 2011)”. On the contrary Girod and Bellin, 2011 shows that”British Petroleum increase its production capacity it will be able to reach to more customer base in the market” (Girod and Bellin. 2011). This can be done by using importing technological up-gradation and recruitment of new employee from the host country.  Technology and human force will coincide to fulfil the strategy of company to increase production level and to maintain the equality of the products and services. The increase efficiency in the production of the company will in return increase the export of the company.  British Petroleum will be able to serve and cater needs of all its host countries. Export and import as business transaction have helped British petroleum to achieve its strategic goals.

From the above essay it can be concluded that strategic goals play an important role in fulfilling the imports and exports process of British Petroleum. The essay highlights various points which are evident in successful operation n of the company. British petroleum has benefited from the advantages of export and import in the host countries in the entire worldwide. On the other hand the disadvantages that the import and export practices bring have impacted the companies brand image in the global market. As British Petroleum operates in global market and has a global appeal towards its customers. The company has modulated strategic goals to reach the requirement of import and exports.

REFERENCES

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  • Banalieva. R. E and et.al., 2015. Introduction to Part II: Emerging Economies and Multinational Enterprises, in Laszlo Tihanyi , Elitsa R. Banalieva , Timothy M. Devinney , Torben Pedersen (ed.) Emerging Economies and Multinational Enterprises. Advances in International Management. 28. pp. 43–69.
  • Beamish. P., 2013. Multinational Joint Ventures in Developing Countries (RLE International Business). Routledge.
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  • Chang. S. J., Witteloostuijn, A. and Eden. L., 2010. From the editors: Common method variance in international business research. Journal of International Business Studies. 41(2). pp. 178-184.
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