Reasons for Changes in Global Business Structure

Conducting business abroad has changed drastically since globalization made everything more interdependent.

The way in which we do business abroad has changed drastically in the last twenty years. Political, economic and technological advances since the 1990s have helped impact the modern day global business structure. Its impact as a result of globalization has helped make the world an even smaller place as barriers that were once seen as being impossible to break have been broken, causing a culture of interdependence from one side of the globe to another.

Removing Free Trade Barriers

The creation of international free trade agreements such as the General Agreement on Tariffs and Trade (GATT), North American Free Trade Agreement (NAFTA) and the Association of East Asian Nations (ASEAN) in the 1990s and early 2000s helped liberalize trade barriers between nations. This helped open up economies in the world that had previously been closed and non-competing in the global business arena due to the removal of protectionist measures in their domestic policy. However, as economies grew more interdependent with others in the world economy, the method of conducting business abroad became easier as international expansion and trade enabled technological developments in communication, transportation and financial accounting.

Rise of the Emerging Economic Powerhouses

India and China are seen as two emerging economic powerhouses in the global economy. They are commonly referred to being the "Asian Tigers" in business and financial media. They are often seen as being potential giants in the global arena because of their vast market potential. Both of these countries combined make up the largest group of underdeveloped markets that foreign companies and investors want to engage in, whether it's in fields such as technology, agriculture, or commercial businesses. Also, foreign companies that want to do business in these countries are conducting their business and marketing abroad much less than the way they do it in their home country. Instead, their business and marketing practices are geared towards the domestic culture of the host country.

The Globalization of Human Resource Practices

Globalization has made it possible for foreign companies to hire both domestically and abroad. One of their primary goals when building a foreign headquarters is to be able to create a common corporate culture between their domestic and foreign offices. This enables unity amongst domestic and global peers and can improve effectiveness in productivity at all levels of the company such as in accounting, marketing and myriad other aspects of the business.

Universal Acceptance of the Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (FCPA) was first passed by the United States Congress in 1977 in order to prevent the use of bribery and conflicts of interest when American companies were doing business abroad. It also required American companies doing business abroad to be held liable if they don't conduct the proper due diligence and background checks on individuals and business entities prior to entering into a business relationship. If they fail to do this, it could result into large fines and legal proceedings that could tarnish the company's reputation. Over the past two decades, the FCPA has influenced both the United Nations and several other nations to draft laws that are very similar to it.

Technology Changing Business Practices

Technology in the past two decades has revolutionized the speed and methods in which business is conducted in the global marketplace. For instance, computers, the Internet, email, multi-function printers and smartphones have made business move faster than ever. The global business arena moves much quicker than it did prior to the technological revolutions from the 1980s to the present day. People are now able to utilize video conferencing and email from one part of the world to another while making it possible to conduct international business without all the traveling abroad. Marketing technology has also changed the way we do business in the 21st century, as social media outlets such as Twitter, Facebook and LinkedIn have become one of the primary ways in which companies promote their businesses, products and services.

References

• The Chamber: How the Foreign Corrupt Practices Act is Changing International Business Practices
• International Business: Changing Business Practices in a World of Emerging Economic Giants
• DDI: The Globalization of Human Resource Practices
• Reference for Business: International Management
• Business Beyond Borders: 5 Ways Technology Has Changed the Way We Do Business