WHAT ARE THE FACTOR AFFECTING INTERNATIONAL BUSINESS ENVIRONMENT?
INTRODUCTION
The international business environment is a complex network of economic, political, legal, and cultural forces that shape how organizations conduct international business. It consists of external and internal factors that impact a company’s success or failure in different markets.
Elements in the international business environment are
- Economic stability: This includes an analysis of GDP growth rates, inflation, currency exchange rates, and trade barriers. Companies must consider how a country’s economy might affect its cost structures and profitability.
- Political instability: Companies must be aware of uprisings, war, and other forms of conflict that can disrupt business operations. The policies of a country’s government also need to be considered in terms of taxes, regulations, and labor laws.
- Geography: Logistics of transporting goods, accessing new markets, and recruiting staff. Accessibility to natural resources such as oil or minerals should also be considered depending on the industry involved.
- Technology: Plays an important role business must understand how adopting new technologies might affect their competitive landscape or open up new product or service opportunities.
ADVANTAGES
- Increased market size:International business allows companies to reach a much larger market than they could by selling only in their home country. This can lead to increased sales and profits.
- Access to new resources:International business can give companies access to new resources, such as raw materials, labor, and technology. This can help them to reduce costs and improve their products and services.
- Economies of scale:By operating in multiple countries, companies can benefit from economies of scale. This means that they can produce goods and services more efficiently and at a lower cost.
- Risk diversification:International business can help companies to diversify their risk. This means that they are not as reliant on a single market, which can protect them from economic shocks or political instability.
- Innovation:International business can expose companies to new ideas and technologies. This can help them to innovate and stay ahead of the competition.
DISADVANTAGE
- Political instability: Political instability can make it difficult for businesses to operate in a country. This is because political instability can lead to violence, uncertainty, and changes in laws and regulations.
- Currency fluctuations: Currency fluctuations can affect the profitability of businesses that operate internationally. This is because businesses that import or export goods and services may be exposed to changes in the exchange rate
- Cultural differences: Cultural differences can make it difficult for businesses to communicate and do business with people from other cultures. This is because people from different cultures may have different values, beliefs, and customs.
- Legal differences: Legal differences can also make it difficult for businesses to operate internationally. This is because businesses may need to comply with different laws and regulations in the countries in which they operate.
- Language barriers: Language barriers can make it difficult for businesses to communicate with people from other countries. This can lead to misunderstandings and problems.
- Distance and time differences: Distance and time differences can make it difficult for businesses to manage their operations in multiple countries. This is because it can be difficult to stay in touch with employees and customers in other countries.
CONCLUSION
Understanding the international business environment is vital for any organization looking to expand its operations in multiple markets. It helps companies identify opportunities and devise strategies to sustain growth and profitability.
HOW AURIGA ACCOUNTING HELP YOU
- Maintain of Business in lower cost and Growth of Business.
- Assess to new market and new Technology.
- Recover of Legal, Economic, Cultural and Language risk.
- Easy doing business and Global reach.
