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HomeFinanceInternational business: competing in the global marketplace

International business: competing in the global marketplace

The world market is the commodity-money relations that have developed as a result of globalization between entrepreneurs, organizations, companies from different countries, as well as between states. It is one of the parts of the world economy and appeared as a result of the development of commodity production, international trade, the international labor market - the division of labor resources of the countries of the world. Thanks to the global market, people can purchase those goods that are not produced in their countries.

In a global sense, the world market is a system of internal markets, i.e. markets of individual states. It includes producers of goods and services, their suppliers, intermediaries and consumers who form the concepts of supply and demand in the process of interacting with each other (see details in the International business: competing in the global marketplace 13th edition that was published earlier this year) The extent to which a specific national market will be included in this system depends on the extent to which this state is included in international relations.

Reasons for the formation of the global market

The development of the machine industry, which made it possible to produce goods in huge batches, had a colossal impact on the emergence of the world market. In pursuit of profit, manufacturers began to look for new points of sale and enter the markets of other countries, selling surpluses of their goods there. The most popular products were exported in a continuous stream.

At the same time, the emergence of mass production contributed to an increase in the demand for raw materials, which attracted an even larger number of sellers to the world market. Also, a consequence of this was the globalization of the labor market, that is, the migration of working personnel.

World capital market

This market segment is due to the difference in economic and technological development in different countries. Capital always strives to enlarge, which means it tends to go where something is in its infancy and has the potential and space for growth.

According to the terms of circulation of financial assets, the capital market can be divided into 2 categories:

  • Short-term - mainly speculative capital (forex, derivatives market, partly the stock market)
  • Long-term market - capital with a long circulation period (stock, insurance, credit).

The main players in the International Capital Market are:

  • Central banks - carry out control and management activities of financial institutions and, in general, financial flows between countries.
  • Commercial banks - they play a central role in ensuring the functioning of the International Capital Market, as they ensure the functioning of the mechanism of international payments and carry out the whole range of financial activities: foreign exchange operations (forex), insurance, lending, sale of shares and derivatives.
  • Transnational banks are large banks, which are, in fact, intermediaries between capital owners and investors who take these capital as loans for the implementation of large international projects.
  • International financial, monetary organizations (for example, the IMF - such organizations have preferential access to the world capital market, where they place their bond loans.

Supply and demand in the global market

The movement of goods between states is carried out on the basis of internal and external supply and demand. Thanks to the global market, suppliers of goods know exactly in which areas and in which regions of the world their products are most in demand.

The development of the world market is beneficial not only for producers, but also for consumers, because in connection with serious competition, the risks of facing a product of inadequate quality have become much less. Products that do not meet international quality standards are squeezed out of the turnover in the world market. And sometimes the producers themselves are rejected.

Although in the minds of many people the world market is identical with the concept of world trade, from the above we see that, in our days, it also includes the exchange of a wide variety of services. It also includes the exchange of achievements in the field of science and technology and workforce. And, finally, the world market today is also the capital market, through which the accumulation and redistribution of financial resources takes place.

Syandita Malakar
Syandita Malakar
Hi guys this is Syandita. I started Business Module Hub to help you all to post updated articles on technologies, gadgets. Although I love to write about travel, food, fashion and so on. I quite love reading the articles of Business Module Hub it always update me about the new technologies and the inventions. Hope you will find Business Module Hub interesting in various way and help you accordingly. Keep blogging and stay connected....!
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