International business has evolved into vast networks of employees, automated-machines, and what was once only a handful of executives has been dramatically increased to a major portion of the workforce, so much that it can hurt the company?s bottom line and can cause falsified financial statements, i.e. - Tyco, Enron. The first hindrance on international trade is cross-culture marketing. Another hindrance on international trade is the ?gray? markets.
The first step in doing international business is sourcing, this involves manufacturing and/or purchasing of components in different regions of the world and then putting them together to make the final product. The benefit of producing a product in different locations is it can be done at a lower cost, for example, Indonesia is among the lowest costs in the world, a large domestic market, and relatively close to the rest of Asia. As a result, some companies are not satisfied with their sizes and are now expanding within Indonesia.
Coca-Cola opened a new mass bottling plant in ?02. Between ?99-?02, the government had approved $26.2 billion in new foreign investment. Officials say foreign investors, apart from petroleum and financial-services companies, employ 3.5 million Indonesians, or 3.5% of the workforce. As with any location, there are down points. Pick-pocketing and thefts are common in tourist locales, while civil unrest has been almost a trait of Indonesia/East Timor. (J. Williams, 2002, pg. 35-37) Outsourcing for tech related help lines seem to be corrugating in India where software engineers are in abundance and are willing to work for approx. 1/10 the wage of a software engineer in the USA.
When speaking of international business, marketing plays a major role, how do you intend to inform the consumer about your product? Over 90% of the worlds consumers live outside the US making culture-wise marketing vital.