International relations impacts international trade and thus economic growth and development. Explain this relationship and discuss the interplay of these factors in modern times? The world’s population is divided into different states and different political communities which in one way or another affect the way in which people live. This ultimately forms the basis of studying international relations (Jackson & Sorensen, 2007). Today, international trade has emerged as one of the powerful issues of domestic as well as international trade.
According to Carlsnaes, Risse, and Simmons (2007), trade has become a very powerful issue as the economies of different countries are now pen to trade flows. This has been as a result of great influence from government policies and also as a result of technological changes. Countries all over the world have been seen to adopt free trade policies and at the same time lesser developed countries have also not been left behind. They have been seen to unilaterally liberalize their trade policies.
In addition to this, the triumphant conclusion of the multilateral trade negotiations of 1994 under GATT was seen to further liberalize trade among already developed countries and also among the developing ones. Osmanczyk and Mango (2003) argue that countries are now more than convinced that their efforts to cooperate in the fields of industry, trade, science and technology, as well as other important areas of economic development contribute greatly to security and peace in the world as a whole.
The authors add that realizing the cooperation in these different fields not only boost social and economic progress but also greatly improve the conditions of life of people. The rapidly growing world-wide economic interdependence requires effective and common efforts in a bid to get long lasting solutions in some of the major economic problems such as food, energy, monetary problems. Countries have now realized that the promotion of equitable and stable international economic relations is the solution t achieving a continuously diversified economic development for all nations.
Nations have come to acknowledge the role of international trade as one of the most essential factors in the growth of any economy as well as of social progress. Carlsnaes, Risse, and Simmons (2007) argue that the more countries become more open to trade, the more they will find it advantageous to come up with institutions that will maximize stability and autonomy. Having that exposure to trade ultimately brings higher rates of economic growth. This may then translate to improved conditions for the surfacing of democracy. Trade liberalization can therefore be said to foster conditions which facilitate political liberalization.
Trade liberalization may also have significant implications when it comes to international politics. This is because when countries are open to the international economy, it ultimately affects their political relations with other countries. In addition to this, most international institutions have been seen to have a great influence in trade as many of them highly depend on the economic conditions of debtors or alternatively the rapidly changing ideas and preferences about trade. The institutions therefore can be said to have greatly aided the liberalization of trade all over the world.
2. Describe the role of multi-national corporations in international relations? Multi-national corporations have had a great influence in the international political economy. In some countries, their financial turnover has exceeds the Gross Domestic Product of that country or state. As a result, most of the states have endeavored to attract multinationals and at the same time establish relations with them. In addition to this, the multinational corporations do not function in seclusion but are seen to negotiate with governments.
This has consequently seen the corporations acquire some government roles in their quest of pursuing their interests. But the question that arises here is whether any state can act autonomously either in the international political economy or in the international political system. To some extent, the state has given up powers to the multi-national corporations. The relationship between the state and the multinationals can therefore be described as one of equally increased dividends and shared power. The state clearly wants to retain power and also be able to regulate the sector of finance.
However, a power struggle emerges between those states seeking to regulate effectively and tightly, against those that function in relaxed regulatory administrations. (Salmon, 2008) 3. Discuss the advantages of a standardized versus customized approach to global advertising Compared to the customized approach, the standardized approach to global advertising is favorable in a number of ways. It is apparent that creative talent is scarce, therefore one single effort to develop a campaign in most likely produce better results compared to ten or twenty other efforts.
This applies especially in countries where advertising experience is limited in one way or another (Kimmel, 2005). Secondly, it is quite expensive to develop a campaign in many countries in terms of incurring costs related to photographs, creativity, layouts, not forgetting the production of cinema and television commercials. When using the standardized approach of advertising, compared to the customized approach, most of these costs can be drastically reduced and more finances can be used in other important areas such as buying space in the media.
Moreover, higher production budgets can be used to produce messages and this ultimately increases the effectiveness of communication. Kimmel (2005) adds that when it comes to global brand names, most companies are known to market their products using one brand name in many countries within the same region. In using the standardized approach of advertising, companies prefer using one image so that they can avoid confusions from local campaigns which might be in conflict with one another caused by not only the amount of international travel happening today but also the overlap of media across national borders.
4. What are some of the concerns involved in establishing global brand names? According to Monye (2000), a brand is seen to represent a product’s totality and even more so the image of the company. The brand should not plainly be seen as just an image but one that ads value and equity for the company. A product’s brand is therefore related to a company’s image and value. Brand names must be able to describe the function of any particular product. Monye states that some determining factors in the process of creating a brand image of a company include the company’s dynamism, style, and history.
Speaking from a universal scope, branding has become an important issue in product management strategy because companies found to have high equity of brand have more and better opportunities of bargaining power in the market place. It is complicated to implement a global brand strategy as language is different, customs and marketing tactics are also different in different nations. In addition to this, developing a global brand personality poses another major challenge.
This is because if a personality is based on a single culture or country, there is a high possibility that it may or may not be extended. However, the rewards of achieving this branding are very worthwhile despite the difficulties involved. 5. Explain the concept of transfer pricing? Discuss the impact of different tax structures and governmental regulations on transfer prices? Agrawal defines transfer pricing as the act that involves pricing of both goods and services when the same is provided for consumption or use to a related party.
Transfer pricing can either be market based or non-market based. By market based it means that the mode of pricing is equal to what is being charged in the outside market to related goods. Most managers however insist that their transfer pricing is non-market based. Reasons for transfer pricing can either be internal or external. Internal reasons include among them monitoring performances and also motivating managers while external reasons will include tariffs and taxes.
According to Moustafa (2004), the policies of income tax of different administrations of foreign countries are very different and are by no chance close to each other. International taxation greatly influences the multinational corporations when it comes to making their management decisions. Taxation affects the multinational corporations in a variety of ways, for instance, how they market their products, where they invest, where and when to remit their cash, and most importantly, the choice of a transfer price.
Moustafa adds that if different countries tax rates happened to be the same, then there would be no significant impact of preferring an elevated country transfer price over a lower one for a multinational corporation’s global profits. References Abdallah, W. M. (2004). Critical concerns in transfer pricing and practice. CA: Greenwood Publishing Group Monye, S. O. (2000). The handbook of international marketing communications. Wiley-Blackwell. Kimmel, A. J. (2005). Marketing communication: new approaches, technologies, and Styles.
Oxford: Oxford University Press. Jackson, R. H. , & Sorensen, G. (2007). Introduction to international relations: theories and approaches. Oxford: Oxford University Press. Osmanczyk, E. J. , & Mango, A. (2003). Encyclopedia of the United Nations and International Agreements. London: Taylor & Francis. Carlsnaes, W. , Risse, T. , & Simmons, B. A. (2002). Handbook of international relations. UK: SAGE. Salmon, T. C. , & Imber, M. (2008). Issues in International Relations. London: Taylor & Francis.