XII Международная студенческая научная конференция Студенческий научный форум - 2020

Introduction

From the factual point of view, it is clear that international businesses play a crucial role in a positive trend of the economy. Each country aims to improve the conditions available for local businesses and make them international. They are divided into several groups and each one of them brings benefit for the country they are headquartered in. With the help of their activities, there will be a reduction in the unemployment sector; countries receive taxes on their profit; international businesses also attract foreign direct investments to the countries. In our modern world, international businesses have plenty of opportunities to grow, however, there are some issues that they are facing to find their market place.

Main paragraph

Opportunities of global businesses are directly connected with international trade. Societies are trying to create/enter free trade. Some have already achieved (EU, the USA). But many developing countries are facing troubles to create free trade between themselves as their economies differ so much. Therefore, it is more relevant to say that international business opportunities differ according to the economy of the country. For the Russian Federation, the best opportunities are to invest in the growing, economically potential, countries. As we know, Russia helped the Republic of South Africa with the electricity supply. But how is Russia going to benefit? Russia created job opportunities for Russian citizens in South Africa and made its relations even stronger.

It was a business opportunity for a country, what about private business opportunities? There are several types in many countries that require privatization. For instance, in Russia, there is not a private space exploration company. We have not heard about a private contractor sending space satellites to space in this country. The recent facts made it clear that private space-tech companies are much more efficient than government-controlled ones, as private spacecraft is reused after each mission. Russia spends around $4 billion for space exploration annually. If this sector is privatized, the government of the Russian Federation could attract more clients and take back its world market shares from the American tech-giant SpaceX. How specifically? The service charges and required technologies, as well as taxes for such businesses, are a lot lower in Russia than in the US, making it a potential country to change this sector into private business.

The Russian government used Kazakhstan as a launching place for such rockets and satellites. They have already created such services, and if the private sector achieves to use the rockets several times, not only does the private company benefit from this but also the countries as well. According to the contract between Russia and Uzbekistan, Russia will help build satellites for Uzbekistan and take its charges from the implemented project. This project is planned to be completed by the end of 2021.

The next opportunity is seen in the service section. Local businesses stay local because of the lack of advertisement or centralized phone applications like Alibaba or Amazon. Approximately 15% of GDP of the People’s Republic of China comes from imports which means they cannot produce everything in the country, leaving a gap for other countries to fill this space. Alibaba is an example of a private company at the international level. Other local businesses could apply China’s method: it is using this company to sell its services and goods through this company, charging the clients export taxes on the goods. All the sides benefit in this process, local businesses are becoming international, China increases its export rates, as well as getting profit. As a result, there will be more available jobs for the citizens of the country. The only limitation of this business project is that when a private company starts such service, the company will have to build the trust of the clients (high-quality goods, repairing services in case of malfunction, compensation of expenses if the client is not fond of the product).

Furthermore, there is a website (application) called Idealista which helps to find affordable places to rent, buy, and sell. This website is only used in 3 countries (Italy, Portugal and Spain) although the prices are cheaper than in Airbnb and more reliable. The services are a lot faster in Idealista, but because of the lack of the advertisement, it has not achieved great success. People have not heard about Idealista and therefore they would not prefer it to Airbnb. Thus, the lack of advertisement acts as a limitation to become international.

European Union and the United States are examples of the fastest growing economies in the world. They have created a free trade and a single visa regime. The openness of the countries in the EU invites investments, also they benefit from the flow of tourists. The same applies to the USA. All these cases create better conditions and opportunities for businesses to grow. But can we imagine a new union of countries? The heads of Central Asian countries came to a conclusion to implement this method. 5 countries in Central Asia are planning to create free trade between themselves, as well as a single-visa regime. The first effect of this technique would increase the number of tourists to the countries. Businesses and goods may attract new customers and investors.

The power of branding also affects the development of international business. The brand has two main levels in our modern world. The company chains like Coca Cola, McDonald's etc. Their franchises carry the same services and qualities of business operation. We buy iPhones in Japan confidently as we know that they have the same high quality as the ones produced in the US. The power of branding attracts millions of customers. Another level of branding is “country-wide”. Several countries have exceeded others in certain business sectors. The US is better in film production (Hollywood) and manufacturing goods. Japan is good at artificial intelligence and technologies (cars, robots). India exceeded in medicines and film production (Bollywood). The 2019 Nobel Prize Winner in Economics Sciences Abhijit Banerjee in his book Good Economics for Hard Times stated that out of the imported cars in the US, however good was cars from Bangladesh, people tended to buy Japanese cars (Honda, Toyota etc.). The clients believed that the Japanese companies are reliable and bought cars from Japan regardless of the company names. While Bangladesh Auto (car company) had better offers and cheap prices for good quality, it could not compete with the Japanese companies. And the result was that the country (Bangladesh) does not have a deep car production history and trust of clients. The power of branding carries exactly these qualities. If we acquire this power, we will be able to increase not only the economy of the country, but also we could boost the businesses at the local level to global.

Conclusion

In the foreseeable future, we can see huge developments and opportunities in several fields, like IT (new phone applications offering services), manufacturing (satellites, robots), biotechnology (new vaccines, medicines, cures for fatal diseases). However, the possibilities of their development are dependent on how a country can create the best environment for business activities in its territory. Lower taxes for the local businesses to thrive and better political and economic approaches to running the businesses are the fundamental steps towards the globalisation of the business activities.

LITERATURES

Electronic resource: Good economics for hard times by Abhijit. V. Banerjee and Esther Duflo -Nobel Prize Winners in economic sciences. Link to the source: https://www.publicaffairsbooks.com/titles/abhijit-v-banerjee/good-economics-for-hard-times/9781541762879/.

Electronic resource: 2019 Annual report by country of World Bank. Link to the source: https://data.worldbank.org/