International business

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Trade involves exports and / or imports of goods and services. One of the most important facets of Wal-Mart business strategy is offering the best quality products at the lowest possible prices. To achieve this objective, Wal-Mart depends heavily on imports from countries such as China, where the productions costs are significantly lower, mainly on account of low-cost manpower. For example, its imports from China during 2003 amounted to $15 Billions (Case study, Rugman amp. Collinson, 2009, pp.30 amp.31).In contrast to exports / imports, FDI is investment in foreign countries, with a view to set up operation bases to service the local / regional markets from such bases. FDI helps to expand markets and competitiveness due to many factors such as savings on freight costs, commanding scarce but locally available raw materials, catering to theWal-Mart’s strategy of wide coverage of the US market with quality products offered at lowest prices soon found competitors as well as distracters. The factor of cheap imports from China and other Asian region sweat-shops could be easily copied by the competitors. Wal-Mart’s distracters targeted its reliance on imports from China at the cost of local producers and the adverse impact of its massive operations on the survival of small businesses, like the neighborhood stores. In the face of such developments, Wal-Mart had to find new markets for business expansion.The US, European Union (EU) and Japan form the triad of economic regions in the developed world and command a high standard of living and lion’s share in international business. The EU has 27 member countries, all of which are geographically and culturally close. EU has emerged as the world’s largest importer and exporter and its gross domestic product (GDP) is higher than that of the US or Japan (Rugman amp. Collinson, 2009, Ch.1). The political, economic, social and technological factors