Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

KENYA METHODIST UNIERSITY
FACULTY OF BUSINESS STUDIES AND MANAGEMNT

DEPARTMENT OF BUSINESS ADMINISTRATION

COURSE CODE: BUSS 441

COURSE TITLE: INTERNATIONAL BUSINESS

NAME: TEDDY KIMATHI

Importance and purpose of international business in Kenya being a diverse country
Sovereignty of a nation
Kenya is a sovereignty state and it occupies an important place in international economic
relations Kenya's participation in world economic arena takes many forms one of which is
engaging in international business and international trade
...
Kenya should therefore play its rightful role in international business arena
...
We use the products made by international business either here in Kenya or in other
countries
...
We enjoy products made or harvested the previous day in a country thousands of
kilometers away from the consumption centre
...


In our contemporary period, the quality of life of a people in a particular country is defined, not
by the amount of foreign exchange reserves held by a country, but by the quality and quantity of
goods and services available and are being enjoyed by the citizens of that country
...
Every country should strive to participate in the international business events
...
But they may not enjoy fully these goods and
services if they do not have the purchasing power
...


The classical approach in developing the economy of young nations is by establishing
impact substitution industries
...


The idea was based on the nation that if a country develops import substitution industries, then
there will be no need to import these items
...
Today, Kenya has a well-developed industrial infrastructure, better
than that of Uganda, Tanzania, Rwanda, Burundi and Somalia
...
This had the effect of exposing
protected Kenyan industries to international competition
...
These included textile
industries and some of the assembly plants
...
The new United Nations secretary general Ban Ki Moon said that he
took over the running of the UN body from Kofi Anna when there are trouble sports in
Africa, Middle East and Asia
...
Countries should build and maintain "entete cardiale" and where there have been
hostilities try to build "detente"
...
Co-operation in other sectors of the economy, culture, education and
tourism will be developed
...
This will be of
benefit to the citizens of both countries concerned to the groups of countries in the case of
regional groupings
...
Traditionally, Kenya has had historical relations with Great
Britain and the United States of America, but since Kibaki administration took over in
2002, there has been significant shift of Kenya’s foreign policy to look into the east
...


The alliance of Kenya with china and the eastern countries can help this country assert its
sovereignty in choosing friendly nations and trading partners
...


Economic changes in Kenya
The changes in economic policies in Kenya have had profound effect on the development
of international business in the country
...
Various laws in the country were passed that tremendous
affected international business
...

The changes that were instituted during economic liberation brought in new dimension to the
business environment within the country, and called for fresh approaches to the strategic
management of most firms in Kenya
...
The changes of government in Kenya
in 2003 fro Kanu to Narc administration gave firms serious challenges, and they had to

adopt new strategies and increase their capacity to foresee what is about to come and be
prepared to react accordingly
...

World trade organization, World Bank and IMF (international monetary fund) have been
advocating for free trade throughout the world and all their advices are geared towards

liberalizing trade
...


One of the main objectives or duty of WTO is to provide a forum for negotiations between
notions to reduce tariffs and liberalize trade
...


WTO organizes discussion forums through "rounds of talks"
...
The Doha round of negotiations was supposed to be concluded
in 2006, but was not/due to disagreements on the firms' subsides by the western countries to their
farmers
...


World Bank and international monetary fund continue to advice countries on formulation of
better policies aimed at utilizing available resources
...

In latter years, World Bank and IMF began advising countries to look into local resources first
before going out to borrow
...
It entailed
advising countries to privatize state corporations to raise money for running the government and
for investment
...
This referred to the consensus by the two

Washington- based institutions to give a joint advice on the structural adjustment "dose" given to
Latin American countries in 1990s
...


It also included corporate governance, anticorruption, flexible labour markets, WTO agreements,
financial codes and standards, independent central banks, social safety nets and targeted poverty
reduction
...
These advices cannot be termed Washington consensus any more because of
negative connotation attached to the first Washington consensus
...

1) The Ricardian model: measures comparative advantage, therefore technology in
business differs internationally
...


2) The Heckscher-Ohlin theory provides an elegant solution to organizational problems by
incorporating the neoclassical price mechanism into international trade theory
...
It predicts that countries will expert those goods that make intensive use of
locally abundant factors and will import goods that make intensive use of factors that are
locally scarce
...


Additionally, owners of opposing specific factors of production (i
...
labour and capital) are likely
to have opposing agendas when lobbying for controls over immigration of labour
...
This model is ideal for particular industries in understanding income distribution
...
These include the fact that most trade is between
countries with similar factors endowment and productivity levels, and the large amount of

multinational production (i
...
In one example of this
framework, the economy exhibits monopolistic competition and increasing returns to scale
...
The gravity model, in its basic farm, predicts trade
based on the distance between countries and the interaction of the countries economic sizes
...

The model has been has been proven to be empirically strong through econometric analysis
...

6) Absolute advantage
...
On the basis of this theory, Adam smith
proposed that countries should specialize and produce those goods for which they have absolute
advantage and then import this other that's they need from other countries having also absolute
advantages to produce them
...
Adam smith believed that by allowing
free commerce for traders and promoting specialization, then each country can bring to the
market goods that it had absolute advantage
...
He said
the wealth of amount of gold or the foreign exchange that a government had in reserve banks, but

rather the amount of goods and services enjoyed by the citizens of a country
...

7) Comparative advantage
David Ricardo proposed theory in 1817 and its states that a country can specialize in producing
those goods in which it had comparative advantage and then import those products that it doesn't
produce and doesn't have comparative advantage
...
There is no country that is so poor that it has nothing to offer to the rest of the
world
...

Countries are like individuals
...
Every one has
some talent that needs to be nursed
...
Every country must look for these economic activities that David
Ricardo called comparative advantages and then nurse them to exploitable levels
...


8) Natural advantage
This theory states that same countries are endowed by nature to have minerals, oil, or even
different climatic conditions suitable for producing certain crops
...


Oil deposits are found in large quantities in the Middle East
...
Countries with natural resources just
exploit these and thus enable them to participate in international business
...
Countries can increases this advantage by developing the following factors:

a
...

They can then expert skilled labor or attract labor intensive production in their
countries
...


Most of the countries of the developing world are training more of university graduates that
cannot take up blue color jobs
...
If a country produces more of university trained graduates then there will be an a
symmetry in employment system whereby there will be few people to work in blue collar
jobs, while there are a lot of unemployment university graduates unemployed
...


b)Culture
Some countries have exploited their unique cultural quantities to improve their
participation in international business
...


Japan is known to incorporate all Japanese culture to every management style that is being
implemented in Japan
...


c) Geographical position
A country can decide to take advantage of its geographical position by adopting
particular policies which will give rise to acquired advantages
...
Some countries
have already taken the advantage of the western cultures huge demand for out flowers
...


These products are now being grown in big quantities in tropical countries and then
exported to the northern countries during winter, Kenya has tried to take the advantage of this
theory by developing the production of tropical fruits for exports and the growing of cut
flowers such as roses and carnations
...
Lelax global limited, Nairobi; Kenya

---