Introduction
Generally speaking, the business ecosystem across the globe is a large continually evolving system of markets, commodities and consumers exchanging connect and utilities across the continents. It has certainly changed dramatically in the past 20 to 30 years from advances in technology, globalization, digital transforamtion and development and socio-economics. Governments, investors, entrepreneurs and consumers must understand how business works; the opportunities and threats in business; and what is the future in business.
This article will provide an overview of the state of business with the world; review the key global trends; a look at challenges for multinational corporations; and glimpse into the future of trade and commerce;
1. Globalization of Business
Globalization is the process of continuously evolving and a process of interaction of world economies. Businesses now are no longer thinking of the notion of operating only in one country; they are finding new markets, new employees, new efficiencies in their business with a world view.
Development of Multinational Corporations
The multinationals today, Apple, Toyota, Nestlé, and Amazon would be considered multinationals because they deploy operations, supply chain, and customers in multiple countries. Brand disappearance have forced businesses into economies of scales that give rise to access to good and new markets. Multinationals play a significant role in the business ecosystem because they invest in developing economies, create stable jobs in those economies, and the transfer of technology.
Outsourcing and Offshoring
Globalization has resulted in outsourcing and offshoring for various companies as they simply relocate portions of their operations away from their current environment either to find cheaper labor in different countries or simply find a better quality of resource. Outsourcing and offshoring has resulted in various global supply chains, as a single products production may take place in various areas of the world. For example, an iPhone may be designed in the US and assembled in China, using sources from toys intermediate parts in South Korea and Japan.
2. Emerging Markets and Shifting Economic Power
Historically, the US and western Europe have been dominant powers in the world of global business. Today, emerging markets in Asia, Africa, and Latin America are becoming increasingly important players.
China and India as Economic Giants
Today, China is becoming the second largest economy in the world and is rapidly becoming recognized as the “world’s factory.” India is quickly increasing in prominence and economic weights with a growing middle class and growing digital economy. Both countries represent significant foreign direct investment (FDI), large consumer markets, and potential hubs for innovation.
The Growing potential of Africa
Africa has had some of the fastest growing economies in the world and is viewed as an emerging frontier of the world of business (see Muriuki & Gichuhi, 2020). The African Continental Free Trade Area (AfCFTA) is a continent-wide effort to create a single African market through the a trade agreement amongst 54 African countries (Dafaalla, et. al., 2020). This agreement will facilitate better intra-African trade and attract global investment to help the emerging economies of the African continent.
3. Global Business Technological Disruption
Technology is changing how businesses run, how they produce/distribute goods and services, and how they interact with customers around the world.
Digital Transformation and E-commerce
E-commerce platforms like Alibaba, Amazon, and MercadoLibre are changing the retail landscape and giving other businesses, including small ones, access to a global marketplace enabled by digital media. Technologies such as, artificial intelligence (AI), big data, and cloud computing allow businesses to personalize service levels, perform analytics to improve efficiencies, and refine global logistics.
Fintech and Global Financial Services
Fintech (financial technology) is creating more options for individuals and businesses, as well as moving services to every segment of society, better financial services now exist to reach every part of society, and to do so more cheaply. Banking is in disarray over mobile banking; cryptocurrencies are forcing traditional banking to take action; and bank support for cryptocurrencies is expanding (“Emerging Trends”). New technologies, such as blockchain capabilities (Johnson, 2022), will change the banking world and alter its relations with cross-border transactions which will eliminate banking fees on transactions.
4. Unfolding Nature of International Trade Agreements
International trade can be just as complicated given widespread trade agreements, many enforcement agreements, and some organizations (such as the World Trade Organization- WTO) to manage the process, as well as regional blocks (such as the European Union-EU) or regional trade deals (such as the United States-Mexico-Canada Agreement- USMCA).
Trade Agreements Facilitate Collaboration
Trade agreements focus on lowering tariffs, harmonizing regulations, and protecting intellectual property. They provide a legal basis for international business and dispute resolution.
Geopolitical Tensions and Trade Wars
However, trade relationships are often challenged by political and strategic disagreements. The U.S.-China trade war was, for many companies, the epitome of uncertainty brought on by geopolitical tensions, significantly altering supply chains, and providing massive uncertainty for business. Moreover, sanctions, tariffs, and export controls continue to have a direct impact on world trade.
5. Sustainability and Corporate Responsibility
As climate change causes mass floods and wipeouts of land and resources, world business must transition to the era of sustainability.
Green Practices
Companies have begun to invest in renewable energy, lowered their carbon footprint, converted to a circular economy, and are focusing on a full range of Environmental, Social and Governance (ESG) measures that are increasingly accepted and expected by investors and consumers.
Sourcing, Supply Chains, and Demand for Transparency
Today, consumers are demanding more transparency. It is increasingly unacceptable for global brands to use resources, adopt exploitative labor practices, or condone any labor that does not embrace fair pay practices or allow a living wage (in terms of local purchasing power).
13. Effects of COVID-19 on Global Business
The COVID-19 global pandemic significantly impacted business operations, supply chains, and consumer behavior at both the domestic and international levels.
Increased Digital Adoption
Lockdowns and travel restrictions forced companies to quickly move to remote work, digital payments, and virtual tools for collaboration. Companies that early into digital transformation were more successful in navigating the crisis.
Repositioning Supply Chains
International shipping disruptions and shortages of materials forced businesses to reconsider supply chains and their reliance on countries for sourcing. There seems to be an increased interest in reshoring and diversifying suppliers.
7. Significant Challenges in International Business:
Although there are opportunities, there are still challenges to world business.
Regulatory and Legal Challenges
When businesses operate in multiple countries, they must be regulated by different laws, tax codes, labor regulations, compliance standards and levels of complexity. There are numerous legal risks consolidated when operating in international markets.
Currency Risk and Inflation
International companies must operate with currency risk and inflation and volatile investment and financial markets. U.S. companies operate and report on profits in U.S. dollars but may have challenges with fluctuating exchange rates which affect pricing, profit levels, growth and investment.
8. The Future of World Business
In conclusion, the future of world business will be defined by continued innovation, sustainability, and inclusivity.
Rise of Remote and Hybrid Work
Remote work is a worldwide trend that allows employers to source and hire talent everywhere in the world. Digital nomads, virtual teams, and global freelance economies are transforming the nature of work.
Artificial Intelligence and Automation
AI will continue to transform an ecosystem of industries, from manufacturing to customer service. While automation has the ability to increase productivity, it raises other issues, such as the appropriation of labor, job displacement, and economic inequality.
Inclusive and Purposeful Business Models
More and more businesses are aligning their missions with social impact. Issues about people: diversity, inclusivity, and purpose, have fast become drivers of people’s performance, develop loyalist brand ambassadors, and create flow-on opportunities when the organizations take on inclusivity.
conclusion
world business continues to evolve. As opportunities for expansion into new markets increase and technology develops, businesses have to be able to evolve with and navigate through complexities. While globalization offered unrivalled growth opportunities, it can build new complexities from these opportunities. Business leaders can be charged with navigating geopolitical disputes, environmental responsibilities towards local regions, being stewards of equity, remit responsibilities to people challenges in labour rights and more.
