International Business Essay Example | Topics and Well Written Essays - 3750 words

International Business - Essay Example The company ranks 46th among the 500 companies listed in the fortune 500 list of global companies in terms of the highest market capitalization (Financial times, â€Å"FT Global 500 2013†). Its operations are spread over 99 cities across 39 major countries all around the world. This suggests the company’s significant global presence. With the onset of globalization, expanding operations in a foreign country has become a primary strategy followed by companies in order to explore foreign country markets and consequently gain competitive advantage. GSK is no exception as they follow the same strategy in order to lay a solid foundation for the company to make business via expanding into foreign markets. Formulation or rather implementation of such strategies, alongside accruing benefits for the company, sometimes raises concerns for the company as well. One such problem that will be described in this particular essay is the ethical issue that has proven to be a cause of con cern for GlaxoSmithKline while operating in the foreign market. Recently the company has been associated with certain ethical lapses while it was operating in China. The company was accused of carrying out unethical practices in order to beat the competition in the market and maximize value for the company. The following sections will involve a thorough analysis of the scenario that prevails in the host country and the ethical issues were faced by the company while it was carrying out its international operations. Following that, three alternative strategies to eliminate such practices will be explained and based upon that a recommendation will be suggested regarding the best strategy to be adopted by the company. Business environment in China China, being an emerging economy, offers a lot of market opportunities for investment to foreign companies. The country offers access to a large market thereby providing considerable savings in labor costs. This highlights the country’s huge potential for economic growth. However, having said that, precautionary measures must be taken as a huge difference in the political and cultural environment prevails in China that might prove to be risky thereby posing uncertainties for foreign investors (Fogel, â€Å"Business environment in china: Economic, political, and cultural factors†). Economic environment China has been known to be the most favorable destination for foreign direct investment in the recent past. The country has shown a very stable economic growth which has lured top companies from all over world into investing in China. 450 out of the Worlds fortune 500 companies invest in China. Foreign direct investment accounts for 4.1% of national tax revenue, 58% of foreign trade and 27% of the value assed production. China has a huge deposit of foreign exchange reserve which helps it conduct trade related to import and export smoothly. The country joined the World trade organization in 2001 which resulted in a rapid growth in the country’s imports and exports thereby witnessing foreign direct investment of $60 billion annually in 2006. The foreign exchange reserve of China exceeded $1 trillion for the first time in the year 2006 and thereafter in 2008 the foreign exchange reserve of China totaled to $1.9 trillion (China Foreign Exchange Reserves, â€Å"US State Administration†). China is mainly engaged in the industrial exports of manufactured goods, garments, electronics and textiles. As far as China’s infrastructure is concerned, it has suffered from