Each country is often unique from other countries due to the nature of the standards observed in that particular country. In a similar fashion, international business practices are designed to create a unique environment that facilitates a country to engage in global business effectively and efficiently. Many multinational corporations target to expand their presence in the global market so as to increase their profitability. Although attempts have been made by various participants in the international business, particularly multinational corporations, to standardize international business practices, many countries have maintained their own practices. The nature of business practices undertaken by a country in relation to the international business depends on the economic environment in such a country. Nevertheless, the Word Trade Organization has been involved in the development of sound international business practices for all countries willing to engage in it. The desire by many countries to keep at par with the global economic trends has prompted them to consider international business practices seriously.
A global company should ensure that its employees make their decisions in accordance to the fundamental principles associated with international business practices. In many multinational corporations, global business practices are aimed at communicating as well as reinforcing basic values to be observed by the members of the organization. Furthermore, companies engaged in international business may make their decisions based on the approaches preferred by the target customers such as the religious and cultural inclinations of the target market. The practices embraced by many multinational corporations are based upon critical survey and study of the target market and the prevailing contexts of certain countries.
International business practices are generally made up of various categories for many countries (Grath, 2008). Various categories of international business practices include: taxation, trade organizations, exporting, commercial policies, and foreign investment. In each of the categories, there are distinct measures and practices that are meant to impose control and regulations for each member country. For instance, exporting has a broad range of activities and regulations. Additionally, every country has a specific set of rules that govern export and import activities. Exporting has various important sub-categories that ensure smooth operations and practices as far as exporting is concerned. Examples of important players in the exporting include: agents and distributors, import duties, import restrictions, and import documentation.
Agents and distributors are important for the success of international business as they carry out business obligations on behalf of emigrant companies setting up operations in another country. As such, agents and distributors get legal authority from a country to carry out liaisons locally on behalf of firms abroad. On the other hand, countries may impose import restrictions in case of threats from certain imported products. Such restrictions may be in form of quotas, exorbitant import duties, moral persuasion as well as total burn on use of certain imported products (Kelly, 2008). A country may impose import duty on imported products or not. Moreover, the process of importing has to be done through presentation of valid documents such as commercial invoices by the sellers, certificate of inspection, packing list, and insurance policy as well as the bill of lading.
Trade organizations, as a category of international business practice, comprise of individual corporations, companies owned by private individuals, and branches of certain business firms. The existence of corporations to be involved in international business is done after the required legislations are adhered to. Commercial codes on countries differ extensively and, therefore, a corporation needs to observe the legal requirements in its mother country so as to be legally registered to operate. Similarly, companies owned privately have to observe the required legislations on their formation and operation. On the other hand, branches for corporations abroad or within the country should be established through the required regulations of the law. Therefore, the formation and operation of various trade organizations in any country is based on the legal requirements of the country. The country’s international business practices take center stage in the formation and operation of trade organizations.
International business practices also encompass foreign investment and commercial policies. Each country embraces diverse commercial policies in relation to international business practices. In most cases, the central banks are involved in the setting up of commercial policies to govern and facilitate international business practices. For instance, the central banks are involved in the development of foreign currency exchange rates (Madigan, 2006). This is normally done through the maintenance of reserves of foreign currencies by the central bank to facilitate trade transactions for the people involved in trade activities. On the other hand, interest rates are set by the central banks of respective individual countries in relation to the nature of the country’s economy. Foreign investment in international business practices comprise of restrictions on investments as well as facilitation of investment processes.
A country lays down certain restrictions to be observed by those interested in investing in the country. In most cases, the restrictions set by a country on foreign investment tend to be less stringent as compared to other forms of restrictions associated with business activities. In fact, foreign investors often enjoy a wide range of rights almost equally to the citizens of a country. This is especially so due to the level of significance foreign investment has on a country’s economy. Therefore, most countries often create incentives to encourage foreign investors. Taxation, as a category of international business practices, is subdivided into diverse sub-categories according to the nature of the firms involved. For instance, many countries have corporate taxes, treaty taxes as well as personal taxes. The country’s tax code is used in the calculation of the various types of taxes.
From the foregoing, international business practices are generally the set of guidelines and regulations observed by individual countries in their involvement with other countries in international business. The practices are meant to create a serene environment that favors the thriving of international business so as to facilitate economic growth and development in the countries involved. By developing good international business practices, a country can reap massive benefits through its participation in international business.