Four Types of International Business Essay

Introduction

The international business operates beyond the borders of a country. Often, the four types of international business have not been distinguished. The business includes international, multinational, global and transnational. Many individuals tend to think that all of them are similar since they operate in another country. However, the businesses are different. It is because they vary in their scope and the degree of operations. The way they interact with the operations in their home country differs from one business to another. The paper seeks to identify the distinction between the four international enterprises and make a recommendation of the type of business to pursue.

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Executive Summary

The paper identifies the difference between the four types of international businesses. To begin with, an international business deal with exports and imports from another country without any form of investment outside their home country. A multinational company is an organization that possesses facilities in different countries which operate on their own as if they are different from each other. Almost similar to this is the global company. It operates in multiple countries with various facilities, but all of them have one company culture with the same processes. The last one is the transnational company. It has substantial facilities established in multiple countries but considers none of the countries as its national home.

The Difference in the International Companies

All the four international organizations have significant differences. The scope and degree of operations set them apart (Mushtaq, 2016). The main differences lie in the investments made, the scope of operations which is whether the company operates as one large firm or as different entities and the place of residence. The companies may have a similar aspect, but at least there is one element that distinguishes them. The similarity between all of them is that they operate across the country border and that is the reason they are commonly referred to as international firms. The above elements set them apart as detailed below.

International companies are famous. In this type of business, they deal with exports and imports from outside the country. There is no foreign direct investment for this business. It means that they have no any facilities like the warehouses outside their home country. All the production operations are done in the home country. Hence, an international company operates as one where all the decisions are made from a central point.

Another business is the multinational company. It has facilities in multiple countries which operates as though they are different entities. The company has a direct foreign investment in many countries. The various facilities have a central place where decisions are made. For example, they may lease or have a contract in a given building to facilitate their services and operations. Furthermore, they specialize in the heterogeneous product since they focus on the local consumers rather than the global market.

Global companies are familiar. It is a type of business that invests in different countries but has a home country. The company invests directly in other countries apart from the home country. Also, this business maintains a strong headquarter in the home country as the central point of its operations. Having one company culture allows them to have a homogenous product in all the nations. Thus, they participate in marketing campaigns to smooth out the difference in the consumer preferences in the different markets.

The transnational companies are complex. Transnational organizations are a commercial business with multiple facilities in different countries. Such an organization is heavily involved in the direct foreign investment. More so, this type of business has global headquarters in various countries and does not consider any country as its home of residence. Thus, decision making is distributed across the offices. Hence, the firm is responsive to the local market and can quickly meet their demand.

Critical Analysis

The international businesses are different. Each business is desirable depending on the requirement of the investors. According to Boykin (2017), centralized management like the one found in the global company allows the company to reduce costs. Also, it is critical for a business to be responsive to the consumer's demand. Hence, international organizations that trim their products according to the market requirement of a given market end up being successful. In addition, international companies enjoy economies of scale since they have large production capacity. It means that transnational companies mostly benefit from economies of scale. Therefore, it is critical to consider the mentioned aspects in choosing the type of business to pursue.

Recommendation

As the chief information officer, the business to recommend is a transnational company. Transnational companies help in meeting the demand of the local consumers since all facilities in the different countries operate as separate entities. As such, they are more responsive to the consumer's requirement. Greater control over a product enhances the competitive edge of a company. Moreover, the company is appealing to the consumers as they do not feel that it belongs to a particular country. Thus, its products are not discriminated against in the market. Consequently, a transnational company is advantageous.

References

Boykin, G. (2018). Differences Between Transnational and Multinational Companies in Marketing by George Boykin. [online] Yourbusiness.azcentral.com. Available at: https://yourbusiness.azcentral.com/differences-between-transnational-multinational-companies-marketing-27276.html [Accessed 18 Sep. 2018].

Mushtaq, S. K. (2018). Difference between a global, transnational, international and multinational company. [online] linkedin. Available at: https://www.linkedin.com/pulse/difference-between-global-transnational-international-syed-kashif [Accessed 18 Sep. 2018].

Rugraff, E., & Hansen, M. W. (Eds.). (2011). Multinational corporations and local firms in emerging economies (p. 276). Amsterdam: Amsterdam University Press.