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.