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international, management,business

Analysis of Two Selected Articles
in the Area of  International Business


With the development of globalization, the world has been moving forward an integrated and interdependent system. The globalisationof production and market has made every nation’s historically separate economy connected. The global institutions help decline barriers to the free flow of goods, services, and capital. In this advantageous case, a lot of international business has appeared. It has been noticed that managing an international business differs from managing a domestic business because it involves a country’s politics, domestic economy, culture and  citizens’ life.
This essay develops the topic using an example of two articles--IAG’S Asian business on track for profitand Offshore funding could lower deposit rates: Rabobank.
At first, this essay will introduce some information about the two companies and give us a brief introduction about the articles.After that, this essay will analyse what the implications for each of the selected articles forthe Australian government,Australian businesses and Multinational corporations. Thensome details in the articles are picked out to show some phenomenon. And some points in porter’s diamond account for these in a detailed and persuasive way.The essay will make a clear understanding of these twoarticles.It will choose the most relevant international business concepts or theories to analyse these articles.At last, the essay will draw a conclusion according to the analysis.

Implications of the Articles

IAG, Insurance AustraliaGroup Limited, was found in 1925. It is the largest general insurance group in Australia and New Zealand. It provides personal and commercial insurance products under some of the most respected and trusted brands .According to the article, IAG chief executive Mike Wilkins has said that the company’s fast-growing Asian business is on track, and the insurer was in talks with potential partners to break into the Indonesia market, which would complete a strategy to operate out of six countries in the region. It also has showed that IAG is one of the few companies that have a clear growth strategy in Asia. Mr. Wilkins plans to establish insurance joint ventures in Malaysia, Thailand, India, China,Vietnam.
RabobankAustralia& New Zealand is part of the world’s leading foodand agribusiness specialist bank.Rabobank plays an integral part and is a significant provider ofcorporate financial servicestothefood and agribusiness sectors inAustraliaand New Zealand.According to the selected article,there is not much evidence of an easing in the deposit war between lenders,while here is no general trend occurring at this point in time. It launched a new “notice saver ” deposit product this month, requiring depositors to give 31.60 or 90 days’ notice before withdrawing funds.
It is apparent that these two companies plan to sell their products or services on the global market and they have make some strategies to investment in other countries. They have noticed the great influence of the globalisationand expect to broaden their foreign market to earn more profit. These measures have an impact on Australiagovernment, domestic firms and multinational corporations.
For the Australian government, it has played a very important role in the international business.On the one hand, it should make a movement to the market’s liberation and deregulation for various kinds of goods, services and assets. On the other hand, the government has to change its policies for better. It will make some policies to make the best use of its resources.Moreover,Porter’s theory of national competitive advantage and new trade theory justify government’s limited and selective intervention to help and encourage the development of certain export-oriented industries. In this case, the government canlay down some appropriatepolicies to help the domestic economic growth.Ithas to establishcomprehensive labour market policies in response to expansion of the international businesses. And the government will make changes to attract the best and highly innovative individuals, both locally and internationally, to work and invest in the country.
For the domestic firms, the good reputation and advanced management of the international businesses could be a great threat, but it will also help the domestic firms build up capabilities and become more competitive(John M  S , 1991).Rabobank's success lies in its people and its structure which allows it to leverage its expert knowledge and global strength to leader in its commitment to sustainable practices and corporate social responsibility (CSR) initiatives.Rabobank is a global deliver superior client relationships and value. IAG also carry out investment and cooperation with other foreign companies and has achieved great success. These domestic firms can learn a lot form the great success of those international companies, such as IAG andRabobank. These domestic firms can also learn advanced management kills and technology.But on the other hand, they have to adoptmore effective strategies to strengthentheir own influence and power(Yves, L &Doz 1986).As an article shows, companies have spent considerable time focusing on their merger and acquisition strategies to become more competitive in the global market (Elena &Robert W 2006). The domestic firms should realize both its disadvantages and advantages.So, domestic firms can take effective measures to vanquish their international competitors.
As for themultinational corporations,it will be a great challenge to expand its business to foreign countries becausecountries are different and they will meet wider range of problems in an international business. The political environment has a great implication in the international business and foreign countries tend to favor their own products and services.IAG and Rabobank are trying hard to broaden their market in other countries. Other multinational corporations can also learn their experience and think out a more perfect plan to gain more profit. They also need to pay attention to the reaction of the government,because government intervention has imposed a lot of limits in the international trade and investment system.As a result, multinational corporations have to find ways to work within these limits.


International business is business conducted in more than one country. It is about buying and selling goods. After analyzing the content of the two articles, Porter’s Diamond can apply to both articles.Porter's diamond model suggests that there are inherent reasons why some nations, and industries within nations, are more competitive than others on aglobal scale.
The government  “has aided the cross‐border mobility of some firm‐specific assets—notably of technology and organizational capabilities—and most countries have also introduced a series of macroeconomic reforms more attuned to the needs of the international market place.”“capabilities within their jurisdiction have been muchmore piecemeal and disparate: some have confined their attention to ensuring that the main vehicles of globalisation(trade and foreign direct investment) helped to promote, rather than inhibit, their national economic goals; others have concentrated on improving the competitive advantages of their firms; but relatively few appear tohave given  much attention to how best nations might create or restructure institutions or improve the quality of general‐purpose inputs”(Egelhoff, W G 1988).The political environment has a profound effect on the management of the business. This means that the business operation is greatly affected by the type of government,political party system, political ideology, aswell as political risks.  Likewise, the government will also be effected by the international businesses’ strategy. The products and services provided by the business will have a direct impact on citizens’ life, domestic economy, ups and downs of the stock.As Porter points out ,factor conditions can be seen as advantageous factors foundwithin a country that are subsequently build upon by companies to more advanced factors of competition (Michael, E P 1990).The resource of the country has a direct connection with the country’s economy (Freeland &Jeffrey 1977).  So the government has to take measures to improve the country’s economy. Moreover, it will establish laws to ensure a legal and stable economy, to avoid officials’corruption, and to protect intellectual property.
Porter reminds us that prosperity of one kind of company isoften followed by correlative industries.  As ‘Related and Supporting Industries’ in Porter’s Diamond
shows, local suppliers cluster around producers and add to innovation(Michael, E Pop. cit).So the correlative industries in the country should seize this opportunity (Idol 1980).However, the rival companies in the country will encounter a threat from the international business. But this is also a great chance to improve the domesticcompany. Porter's Five Forcesmodel has pointed out that a firm prefers lessrivalry in the short term, but over the long run it is better to have more local rivalry because it puts pressure on firms to innovate and improve(Michael, E P op. cit). As a matter of fact, high local rivalryleads to less global rivalry. The fierce domestic market may build up domestic companies’capabilities which can act as competitive advantages. As “Demand Conditions”in Porter’s Diamond shows, “when the market for a particular product is larger locally than in foreign markets, the local firms devote more attention to that product than do foreign firms, leading to a competitive advantage when the local firms begin exporting the  product. ”(Michael, E P op. cit) There are often larger and more demanding at home market than in foreign markets. The domestic firms canput more attention to improvements than foreign companies(Egelhoff 1988).They should learn from these international firms but also develop their own unique  features. Actuallythey have more advantages than those international firms, for they know about the local people’s habits and preference. They can produce better products that can meet the perfect needs of people(Daniels J D  &Bracker J  1989). International firms will have many problems in providing suitable products and services(Paul W & Jonathan L C 1995). They have to consider the difference in countries, religions cultures, laws and people’s habits(Cavusgil 1984). And these actions of local firmswill increase the local exporting companies’global competitiveness. A more demanding home market can be regarded as a driving force of growth, innovation and quality improvements.
In the 1960s, the name"international corporations" was used to define a company with a strong national identification. At that time, the home market was the company's most important focus. By the 1980s, international corporations had evolved into more globally oriented business. Then in this activity, multinational corporations become theprincipal participants. They are the players in the international business "game". As we know, successful companies lie in three kinds of competencies: superior technological know-how, reliable process, and close external relationship(Mascarenhas&Jamil1998).  Most multinational corporations are basedin developed countries. They operate business in more than one country, seeking for the maximal profits.They may be under the control of two or more governments. A multinational corporation may have joint ventures either in its foreign countries or home country as well as subsidiaries(StanleyM 1979). As multinational corporations (MNCs) operate across transnational borders, business managers have acknowledged thatthe increasing globalisation of theworld economy has allowed MNC’sgreater access to wider consumer markets and distribution networks, as well as coordinate production and business transactions within economic clusters or networks involving cross border internal and external relationships (Dunning, 1980).  Multinational corporations will come across a lot of  difficulties when they are expanding their business to foreign countries. When Rabobank that we talk about in the second article in appendix, expand its business, there is a slight cooling. Rabobank is not a special one but an example of multinational corporations. The following are some examples of multinational corporations:American Telephone and Telegraph (U.S.), Toyota Motor Corporation (Japan), AG (BMW) , Telefonica de Espana (Spain) ,Siemens, AG (Germany) , SmithKline Beecham (UK) , Petroleum (Netherlands) ,Sony Corporation (Japan) .When they enter into other regions, they may suffer failure because the different political, cultural and social environment. In a multinational corporation, managers should make beneficial and correct strategies to cope with different circumstances (Doz, Y &Prahalad, C K 1984). What’s more, multinational corporations should learn to utilize the local resources and train a group of skilled person that can well manage a company(Derek T & Laura, H 1987).They need to find correct and appropriate way to broaden their market.


In conclusion, this essay gives specific analysis about international business based on twoarticle examples. At first, the implications for the two articles for the Australiangovernment, domestic firms and multinational corporations are narrated in a general way.After that, the essay will make a clear understanding of these two articles. And Porter’s Diamondis chosen to explain the point listed above in detail. Some details in the articles are picked out to show some phenomenon. And some points in Porter’s Diamond account for these in a detailed and persuasive way(Michael, E P op. cit).First mover implications, location implications, foreign investment decisions,government policy implicationshave been discussed in the body of the essay. It gives instruction about the operation of international businesses and the correct reaction of domestic firms and the government. With the process of globalization, international businesses have become a popular trend, every country and every firm (domestic firms and multinational corporations) should adopt appropriate way to deal with it.



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Yves, L &Doz 1986,‘Strategic Management in Multinational Companies ’, Oxford, Pergamon.


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