International Business Management Essay

2131 words - 9 pages

International Business ManagementRegional Trading Blocs |
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Table of contents
Introduction……………………………………………….……………………. 3
Section one...…………………………………………………………………….4
Section two …………………………………………...……………………...….7
Section three ……………………………….………........………………...….10
Conclusion …………………………………………………………….......…..11
References …………………………………………………………………..…12

Introduction
Regional trading blocs have originally emerged since late 1950s, and overtime have posed significant contributions towards international business activities among certain regions, particularly Eastern Europe, Latin America and East Asia. This has guaranteed great ...view middle of the document...

Despite the increasing importance of regional trading blocs in higher growth and developments in the global context, certain limitations are involved as the societies tend to apply new rules and policies which may not be counted as favorable to them.
Section I – Impact of Regional Trading Blocs on International Business Activities
As noted before, the regional trading blocs have played a very important role in reducing or even elimination of trade restrictions among small countries, regions and also in the international context. Consequently, free entrance in the markets of other countries and trade promotions have been practiced by various multinational enterprises (MNEs). Furthermore, the member countries have become more dependent on each other’s in terms on their financial and economic development.
Nevertheless, what might remain important and perhaps interesting is to understand major incentives in encouragement of regional trading blocs in the world. In the following, the major key outcomes of establishment of regional trading blocs will be discussed.
1. Reduction of Tariffs
At the very beginning, the aim of regional trading blocs was concerned about reduction of tariffs, which can be referred to a certain amount of tax imposed by the government of a particular country, on the goods that are imported to its country. The gradual reduction of tariffs resulted in higher effectiveness in all types of regulations across countries such as environmental, labeling and food safety requirements, thereby affecting the import and export level, foreign direct investments and ability of companies to meet their labor requirements from across the borders. As such, the implications of rules, policies and regulations can pose significant contribution in the business operations.

2. International Export
Another advantage of regional trading blocs can be referred to the ability of countries’ markets in maintaining higher competitive advantage relative to those which are not included in the agreement. In particular, manufacturers of the member countries can purchase raw-materials from each others with relatively low costs, thereby maintaining low price for their products.
3. Wider pool of Human Capital
As noted before, the regional trade agreements provide a wide pool of talented human capital, as employees are allowed to seek employment across borders. In particular, the employees will no longer face any restriction like working visa or job permit when they plan to move to other member country. This, on the other hand, will help the companies to gain competitive advantage and ensure about high productivity and performance.
4. Establishment of Standards
The regional trading blocs are also important for the member countries to maintain a uniform high quality standard in terms of safety, health and industrial relations. It will also help the countries to improve the process of inspection and certifications of the export-products. In...

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