Essay on Knowledge Economy

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Eleanor Poindexter, Week 6 Company Analysis, MBA 723 E3WW, Professor Terrell

To: Professor Terrell
Fr: Eleanor Poindexter
Re: Knowledge Economy
Dt: 06/22/2013

Business Brief

This paper will discuss the differences in strategy between business in a local country, doing business on a global scale, knowledge economy, and intellectual property.

Opening

Pros:

• Intellectual property rights are not only beneficial to individual nations in the international community, but that a free market necessitates careful regulation and enforcement of international intellectual property rights in order to foster growth and provide a fair international market with open and mutually beneficial international trade.

• Poorly enforced or loose regulation of international property rights can also reduce the beneficial effects of a free market.

• Firms that have operated internationally tend to develop at a much quicker pace than those operating locally

• Operating internationally may enable the firm to source raw materials or labor at lower prices 
Increased quality and efficiency: Exposure to foreign competition will encourage increased efficiency. Doing business in the international market allows firms to improve the quality of their product in order to gain a competitive advantage.

• International business presents firms with new market opportunities. These new markets provide more opportunities for expansion, growth, and income. A bigger market means more customers, increased revenue, a larger profit margin, and allows the business to realize economies of scale.

• As the firm diversifies its market, it becomes less vulnerable to changes in local demand. This reduces wild swings in a company's sales and profits.

Cons:

• Although it can be argued that international protection for intellectual property rights would be beneficial for the global economy, not all examples lead to this conclusion.

• An intellectual property right not only creates increased levels of exploitation and polarization in of the corresponding relationships, but it also creates a moral hazard that discourages increased efficiency and productivity.

• Despite claims that intellectual property rights are necessary for the success of the free market, that freedom from intellectual property rights does not cause negative affects on the global economy or domestic markets.

• There are increased operating expenses including the establishment of facilities abroad, the hiring of additional staff, traveling of personnel, specialized transport networks, information and communication technology.

• The firm may need to conform to new standards. This may require changes such as in the production process, inputs and packaging, incurring additional costs.

• International trade may cause delays in payments, adversely affecting the firm's cash flow.

• International business usually requires changes to the firms operating structure. Training or retraining of management may be necessary to facilitate restructuring.

Analysis

Knowledge Economy is an economy that is driven by research, ideas, innovations, and technical skills to generate high impact economic benefits and high paying jobs. Knowledge is a product, tool, and is an asset that can be used to create the next generation of technology and financial increase. This economy can advance and succeed directly from relationships developed among business, education, and government. A strong, sustainable knowledge economy can stimulate growth for both individuals and organizations in a community. Regions that cultivate impactful knowledge economies are able to sell goods and services at a higher profit margin than others

Conclusion

It is often more expensive for the American consumer to buy African agricultural goods than to buy European produce, even though the actual cost of the African produce is lower when it leaves the continent. The price is increased by import
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