External Influences
External Influences
International Business: Key Topics
Foundations of International Business
- Understanding international business operations is vital. This includes trading goods and services, and involves businesses working on a global scale.
- Businesses can shift from domestic to international markets through different stages – domestic, international, multinational to transnational.
- The concept of foreign direct investment (FDI) forms a significant aspect of international business.
Financing of International Business
- Entities like the International Monetary Fund (IMF) and World Bank have a crucial role in financing international business operations.
- Various financial instruments like loans, letter of credit, drafts etc. are critical in the global business environment.
- Appreciate that exchange rate fluctuation can have significant effects on business profitability when trading internationally.
Support for International Business
- Support for international businesses comes in many forms - financial incentives, beneficial tax regimes and even logistical help in certain countries.
- Local chambers of commerce and trade associations often offer support and guidance for businesses looking to operate internationally.
- Government agencies also provide information and support such as UK Export Finance (UKEF).
Globalisation
- Globalisation is an ongoing process of greater interdependence among countries and their citizens. It involves increased interaction, integration and exchange of goods and services.
- Understand the main drivers of globalisation: trade liberalisation, technological advancement, transport improvements etc.
International Trading Blocs
- Trading blocs are groups of countries with specific trade agreements, formed to lessen or eliminate tariffs, quotas and other trade restrictions. -Unions like The European Union (EU), the North American Free Trade Agreement (NAFTA) and Southern Common Market (Mercosur) are instances of prominent trading blocs.
Barriers to International Business
- These may be tariff barriers like trade taxes and non-tariff barriers including regulations, certain standards or bans.
- Political and legal differences between countries can form barriers.
External Influences
- Political, Economic, Social, Technological, Legal and Environmental (PESTLE) factors are crucial external influences that can impact international businesses.
- Political stability, monetary regulations, social norms, technological advancements, legal obligations and environmental regulations all mould the business environment.