The Impact of International Business Theory on Understanding Essay

The Impact of International Business Theory on Understanding International Business - Essay Example Basically, in political economy, but also in a business setting, the theory of inter-organizational bargaining can be utilized to characterize and make an analysis of business and government negotiation, policy formulation and trends (Aharoni, 1966). This theory places an emphasis on the relative bargaining resources and the stakes of every person involved in a bargaining scenario, hence deducing economical and commercial ideas from the analysis. Since any business can be involved in power relationships with competing companies, bargaining theory may include in both the MNC and the host government negotiations the capable reaction from other related MNCs (Audretsch, 1989). Vital phenomena such as the bargain trade limitations and performance obligations can be reflected by critical analysis using this theory. Policies of MNCs and host governments can be incorporated with power relationships resulting in compromising and working together as well as the rivalry with other MNCs. The bargaining theory model, hence is apparent and able to entail numerous considerations such as the ones already named. Firm strategies and the host government rules, laws, policies and regulations may emanate from the decision makers aspect of their own bargaining powers and those of other crucial actors, in addition to their analysis of opportunity costs and their ability to forego any dealings with potential rival MNCs wishing to operate in the host country (Blomkvist, 2012). Among the numerous actors who are important to policy making, MNC does comprise a specific vital group, changes the balance of payments, aid in the country’s overall development, develop and improve on the existing technology and have an impact on other policy fields.