Impacts of International Organizations:
With the increase in international trade it has led into the development of international trade organizations, International trade organizations have been introduced to ensues fair business practice is carried out in all regions, it has also been introduced to ensure large multinationals do not taka advantage of LEDC’s bi gaining from decreased labor expenses and decreased ran materials expenses.
A prime example of an international trade organization is the WTO (World Trade Organissation). The World Trade Organissation is the leading agency involved in the regulation of international trade. It develops ground rules for international commerce and mediates trade disputes between countries and trading blocs.
The WTO was established in 1995 and is the successor body to the General Agreement on tariffs and Trade (GATT), both of these organizations has overseen an exceptional growth in the world trade. In 2000 total trade was 22 times the level in 1950.
The WTO carries out two main processes as an international trade organization. These include:
1. Negotiates trade disputes- Essentially the WTO is a place where member governments go and try to sort out trade problems and disputes they face with each other. The WTO is based on negotiations and forming a status quo
2. Sets rules- the WTO sets rules and regulations during trade negotiations to help maintain and regulate international trade. These rules set are binding contracts which trade policies set by member Goverments have to meet.
These are the main processes that the WTO carries out.
The aim of any international organization is to ensure that trade carried out fairly between countries. The WTO has a range of different goals they wish. Some of these include:
Trade with out discrimination- The WTO hopes to ensure trade can be carried out fairly and equally. Under trade agreements countries cannot discriminate between their trading partners.
Ensure free between countries- The WTO hopes to achieve free trade by lowering import duties and tariffs. Ensuring free trade benefits both businesses and consumers alike.
Predictability- The WTO tries to encourage predictability for businesses. If there is predictability and stability then this encourages investment in foreing markets countries. Again, this benefits both businesses and consumers.
Promoting fair competition- Many of the trade agreements set by the WTO aim to ensure fair competition. Promoting fair competition ensures that multinationals and small sole traders have an equal chance in the market. This benefits the consumer by giving them more choice and decreased prices further contributing to stable economy.
Tries to encourage development- A lot of the members of the WTO are still developing countries that have no implemented the proper trade policies. Through negotiations and conferences the WTO can help developing contries implement the proper policies to ensure free trade can really be carried out in all countries.
It is generally understood that international trade organizations like the WTO provide many opportunities for businesses and consumers a like. However, some of these opportunities are exaggerated and there are many drawbacks to having individual nation memberships. Within this section the WTO is going to be examinated and investigated to see if it really is beneficial to businesses and consumers alike.
WHAT ARE THE PERCEIVED OPPORTUNITIES AND STREGHTS OF INDIVIDUAL NATION MEMBERSHIPS FOR INTERCONTINENTAL?
All businesses activities and operations, including the intercontinental, are influenced by the opportunities they encounter. Opportunities presented by the WTO can present. Opportunities and strengths created by the WTO could affect where Intercontinental expand to next. It is therefore important that International consistently keep an awareness of the opportunities and strengths created by the WTO and how it can benefit their operations.
It is generally understood that the WTO has many opportunities and strengths that it creates for members. These strengths and opportunities are displayed on their website http://www.wto.org/ and are illustrated as the ’10 benefits of the WTO trading System’. Not all of the opportunities and strengths started are actually beneficial to the intercontinental, but some are. Some of the opportunities that influence intercontinental include:
Ensures fair competition- This makes it easier for businesses to compete in new markets effectively and efficiently. It also helps business like intercontinental fall victim to unfair business practices from competitors. For example, destroyer pricing. This generally makes it easier to expand into new markets and compete more effectivtively with market leaders.
Stimulates economic growth- Generally international trade organizations encourage economic growth businesses that operate in members of the WTO can benefit form this. They are given the chance to increase overall revenue and chance to increase net profit intercontinental operates in countries that are all part of the WTO this will be very beneficial to international’s operations.
Decreased expenses- Free trade generally results in decreased expenses through negotiations and trade agreements the WTO can lower trade barriers like import and export duties tariffs and quotas. By lower trade barriers it will decrease expenses of international organizations. This will give businesses like intercontinental the chance to increase profit margins an increase the total net made at the end of each financial year.
Improved efficiency- Operating in countries that are members of the WTO increases and improves efficiency for all organizations. The WTO ensures:
- Transparency of information (clear information about policies and standards)
- Increased certainty about trading conditions: Statements made by the WTO are legally binding ensuring predictability and certainty.
- Simplification and standardization of costums procedure, centralized database system, and other measures designed to simplify trade.
Generally operating in the WTO member countries can ensure improved efficneciy for businesses that operate within them. This is a result of the simplified and ease of access to the world trade information. This gives an opportunity for businesses like intercontinental to increase their levels of efficiency to ensure they can compete more effectively in global market.
Free trade raises incomes- Lowering trade barriers allows trade to increase, which adds to both national incomes and boths and personal incomes. The WTO’s estimates for the impact of the 1994 Uruguay Round trade deal were between $109 billion to 510 billion added to the world income. Free trade between WTO member countries gives businesses the chance to increase revenue further and increase total net profit.
Increases predictability- Trade negotiations that made are legally binding and will implemented within a certain amount of time. This gives businesses the chance to assess operations and how they will be influenced in th future. This will also give them chance to invest in countries that will benefit them in the future. Increased predictability ensures more effective planning for the business make their operations more efficient.
It can generally be outlined that the WTO provides many opportunities for international businesses like the international. By operating incountires that are members of the WTO it gives international the chance to:
Increase efficiency- Intercontinental have the chance to improve the efficneiy o f te operations as a result of simplified documents and easyacess to relevant documents. Improved efficiency will help business like intercontinental compete more effectively in global market
Increases net profit- it is generally understood that international trade will increase income. By operating internationally the WTO countries it will give the intercontinental to increase their revenue and net profit more efficiently and effectively. They will also benefit from increased economic growth within WTO countries.
Increased profit margins- Intercontinental will be able to take advantage from lowered trade barriers like tariffs and quotas to ensure increased profit margins.
Compete more effectively- intercontinental will be able to compete more effectively as a result of fair competition agreements signed by the WTO. This will ensure they can compete more effectively in new markets and so they are protected against unfair business practices like destroyer pricing
Operating within WTO countries can be seen as very big opportunity for Intercontinental. These opportunities will help contribute to the effective maintenance of InterContinental’s international presence contribuiting to the survivial of the intercontinental brand the IHG.
However, even it can be seen that there are many opportunities of operating the IHG, some of these opportunities have been exaggerated.
WHAT ARE THE DRAWBACKS OF INDIVIDUAL NATION MEMBERSHIP FOR INTERCONTINENTAL?
I HAS BEEN IDETIFIEDED THAT THERE ARE MANY STRENGTS AND OPPORTUNITIES THAT THE WTO provides to its members, business and consumers. However, some of these strengths and opportunities have been exaggerated, A lot of the statements put forward by the WTO are false to some extent.
It is important that Intercontinental understand some of the drawbacks associated with the WTO to see if it really is beneficial for them to locate their operations in the WTO countries. By understanding the drawbacks intercontinental can assess whatever perceived advantages of the WTO are true and if there are any benefits of operating on WTO countries. By understanding these points Intercontinental can make more informed and precise decisions on expansion plains and appropriated investments.
Generally a lot of benefits stated by the WTO are exaggerated and there are quite a few drawbacks associated with the WTO. Some of these drawbacks include:
Fair competition not always achieved- The WTO has always promoted the idea of fair competition and they have stated this as an advantage. However, in some countries these strategies have not been implemented. For example, in Qatar there are two monopolies, one of them is Q-tel which dominates the telecommunications market and the other is Qatar airways. If agreements are not applied in all countries then it will not benefit consumers, businesses and other stakeholders that are influenced by the WTO. This could potentially affect how well intercontinental compete in the market as they will be prone to unfair business practices like destroyer pricing.
Free Trade is not always effective- Free trade will not work for all organizations and industries. For example in 2002 the US put an import tax on steel imports to help domestic steelmakers that were suffering form intense global pressure. This resulted in decreased competition but also resulted in increased steel prices in the US. It can be seen that free trade will not always be beneficial to all organizations.
Decreased expenses are not always realistic- Poorer countries cannot always attend WTO meetings. This makes it hard for them to participate in new standards that are being implemented. This means that poorer countries will likely not have lowered tariffs and quotas that benefit free trade. This Means expenses and costs will not be decreased in poorer countries. This will affect international organizations in poorer countries influencing how they compete in the market. It will also affect the costumer service that is provided to consumers. This could potentially affect the maintenance of InterContinental’s international presence as it could in decrease net profit.
Efficiency is not improved- Some of the rules stated by the WTO are very confusing and complex and poorer countries cannot afford to pa7y specialists, lawyers and other support staff to help them interpret rules and regulations. This will also affect how organizations interpret information. They will have to analyze information stated by the WTO specifically as it not simplified. This will make some of their operations inefficient. Imporved efficient is not a benefit seen in some WTO member countries.
Predictability is not always ensured- Like it was mentioned earlier trade agreements are not consistently implemented in each country. This makes it harder for international organizations like intercontinental to make predictions on the extent of the maintenance of their international presence. This will make it harder for them to make improved business decisions making their business operation inefficient
Some of the strengths and opportunities stated by the WTO are unrealistic. It can be seen that there are many threats and weaknesses of operating WTO countries as well as opportunities. Realistically, intercontinental will face constraints if operating in WTO countries. Some of these constraints include:
Decreased competitive edge- in markets and economies where it isn’t fair competition, intercontinental will be prone to unfair business practices. This will affect the maintenance of the international presence and the effective survival of the brand.
Decreased market share- If operating in a market with unfair business practices then it is likely their market shearer in that market will decrease significantly.
Decreased efficiency- In poorer countries where they cannot higher specialized employees to interpret information, intercontinental will have to interpret it them selves which will result in decreased efficiency within the organization.
Decreased net profit- If they operate in countries where tariffs, import duties and quotas are not lowered then it will result increased expenses and decreased net profit.
It can be seen that there are many drawbacks to operating in countries that are members of the WTO. Generally a lot of the advantages stated by the WTO are unrealistic and unjustified. Realistic there are a lot more drawbacks to the WTO that negatively impact on both consumers as well as businesses. I t would not beneficial for the intercontinental to operate in the WTO country includes:
I. Increased incomes
II. Increased efficiency
III. Decreased expenses
IV. Stimulates economic growth
However, it has been identified that there are only perceived advantages and some can be exaggerated. Realistically the only advantage of operating in the WTO country is increased income. The WTO’s estimated for the impact of the 1994. Uruguay round trade deal were between $109 billion to $510 billion added to the world income.
During this section it has been identified that there are many threats and weaknesses through operating in WTO countries include:
I. Unfair competition
II. Decreased expenses not always seen
III. Efficiency not always improved
IV. Some countries do not benefit for free trade
Generally the advantages stated by the WTI are unrealistic and cannot be justified by evidence. The WTO does not benefit consumers and business alike it does not benefit the consumer because unfair competition results in monopolistic market which can result in increased prices. It does not benefit businesses. Generally the WTO does not benefit the consumer or businesses.
There are a lot of problems in terms of equality in the WQTO, in the tact that there is a lot of bias towards richer countries and tends to ignore the issues facing poorer countries. As there is not any consistency thought all WTO countries it can make it harder for businesses like intercontinental to make future predictions.
Generally operating in WTO is not beneficial to organizations because strengths and opportunities are unrealistic and unjustified. Threats and weaknesses are more present and realistic in the WTO. This could seriously affect the outcome and maintenance of InterContinental’s international presence if they decided to further expand within the WTO.
The WTO should be improved further to ensure free trade will benefit all countries whether rich or poor. The WTO should be more understanding of poorer countries and wow less bias to richer countries. By doing this they ensure that consumers and business benefit as a result ensuring international trade operates more effectively.