Essay on International Business Case Study Example | Topics and Well Written Essays - 2000 words

Essay on International Business - Case Study Example For example. Toyota produces Camry in Kentucky; While Dell produces and sells Pc's in China. Free Trade areas - agreements that reduce tariffs and barriers among trading partners further encourage international trade. NAFTA (the North American Free Trade Area) and the EU (European Union) are examples. Doing Business internationally today is big business. For example the total value of US imports rose from $799 million in 1994 to $135 billion in 2003; Exports rose from $72 billion to $88 billion in the same period. More globalization means more Competition and more competition means more pressure to be 'World Class'. That is to lower costs and to make employees more productive .As one expert puts it ' the bottom line is that the growing integration of the world economy into a single , huge market place is increasing the intensity of competition in a wide range of manufacturing and service industries'.(Dessler:2005) Dixon Ticonderoga is a victim of Globalisation. Dixon has owned one of the oldest public companies of pencil manufacturing in the U.S. His company has enjoyed a long period of success. That halted in the 1970's. That only because China had started dumping their pencils in the U.S market at cheaper rates. And it was only after some time that the duties were imposed on the imports which raised the prices. This helped Dixon's company to make profits ag... And it was only after some time that the duties were imposed on the imports which raised the prices. This helped Dixon's company to make profits again, but then the Chinese kept making better cheaper pencils and as a result after a few years, the imports returned to the high level they were at, before the imposition of duties. Dixon in the meantime was trying rigorously to meet this foreign competition on price. He tried and experimented on making cheaper pencils by using recycled paper. He had to dump the idea as they were getting stuck in the sharpener. He then also decided to use the Canadian Insencedar wood for his premium brand. Later, he started purchasing lower priced Indonesian wood. Dixon started to purchase erasers from a Korean supplier, in an effort to further reduce costs. But the company was still loosing money. And all his efforts were in vain. Theory Application: 'Globalization creates anxieties, largely because of what trade theory and international Economics say about its likely impacts on the geographical distribution of economic activities. Classical Ricardian trade theory, if applied directly to a world of decreasing trade barriers and transportation/transactions costs, suggests that comparative advantage effects will be freed up to play themselves out on a wider spatial scale, leading to rearrangement of activities on the landscape. The economies of places will generally become more specialized, clearer expressions of their globally-redefined comparative advantages '(Ricardo, 1963; Balassa, 1963). International Business Theories: International business also plays a vital role. Some of the International Business theories are: Theory of Comparative Advantage - Specialization: Specialization of products and