Never before in American history have US businesses large and small been so deeply involved in and affected by International business. A global economic boom, unprecedented in modern economic history, has been under way as the drive for efficiency, productivity, and open, unregulated markets sweeps the world. Powerful economic technological, industrial, political, and demographic forces are converging to build the foundation of a new global economic order on which the structure of a one world economic and market system will be built.
Five years ago the world was a very different place. The nation was still mesmerized by the information technology boom of the late 1990s. Most did not visualize the high tech bust of 2001 or the associated Enron and WorldCom scandals. No one could have imagined the September 11, 2001, disasters, not even the perpetrators. Wars in Afghanistan and Iraq were not on the horizon. The major international conflict grabbing headlines then was the series of diplomatic dustups among China, Taiwan, and the United State. Who could have predicted the disruptions associated with the 2003 SARS outbreak in Asia? The great Indian Ocean tsunami of 2004 was perhaps impossible to anticipate. Oil at over $ 60 per barrel was unthinkable then. The promise of the space program and the international space station whose future was dramatically jeopardize by the Columbia shuttle tragedy and associated NASA budget cuts.
Through all these major events American consumers continued to spend, keeping the world economy afloat. Layoffs at industrial icons such as United airlines and Boeing and a generally tough job market didn’t slow the booming American housing market. Lower government interest rates meant a refinancing stampede, throwing the cash that fueled the consumer spending. And seeing into the future is harder than ever. Most experts expect global terrorism to increase and the carnage in Bali, Madrid, and London seem to prove the point. Many predict a global housing price collapse and the associated economic disruptions. Finally, as the global economy continues to wobble, international trade tensions take on new importance. Competition from new Chinese companies has begin to raise concerns in the United States. The steady growth of the US trade and balance of payments deficits is particularly worrisome particularly those with China.
International marketing is affected by and affects all these things. For the first time in history McDonald’s pulled out of international markets in both Latin America and the Middle East. Slow economies, increasing competition and anti-Americanism have impacted their sales in both regions. Moreover, recall that the September 11 attacks were on the World Trade Center in New York City. Indeed the salient lesson for those involved in international commerce at the turn of the 21st century is to expect the unexpected. Any executive experienced in international business will verify that things never go as planned in global commerce. You will have to plan and forecast, but market, particularly international ones, are ultimately unpredictable. The natural fluctuations in markets are best managed through building strong interpersonal and commercial relationships and broad portfolios of businesses. Flexibility means survival.
Perhaps now, more than ever, whether or not a US company wants to participate directly in international business, it cannot escape the effects of the ever increasing number of North America firms exporting, importing, and manufacturing abroad. Nor can it ignore the number of foreign based firms operating in US markets, the growth of regional trade areas, the rapid growth of world markets, and the increasing number of competitors for global markets.
Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business beyond today’s “Bumpy roads” and far into the future: (1) the rapid growth of the World Trade Organization and regional free trade areas such as the North American Free Trade Area and the European Union; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia and eastern Europe; (3) the burgeoning impact of the Internet., mobile phones, and other global media on the dissolution of national borders: and (4) the mandate to properly manage the resources and global environment for the generations to come.
Today most business activities are global in scope. Technology, research capital investment, production, and marketing, distribution, and communications network all have global dimensions. Every business must be prepared to compete in an increasingly interdependent global economic and physical environment, and all business people must be aware of the effects of these trends when managing a domestic company that exports or a multinational conglomerate.