International Business

International Business

International Business

In the business market there is so much competition that companies sell outside the country to increase sales. Increasing internationalization of business is requiring managers to have a global business perspective and an understanding of the differences in the environmental forces of the markets in which they operate. Decision making in the international environment is more complex and having an understanding of the external environmental forces enables international managers to be alerted to new opportunities. External forces are commonly called uncontrollable forces. Although managers have no direct control over external forces, knowledge of these forces will better prepare them for greater success in the international business environment. Five of the uncontrollable forces to be identified and their impact on Australia and Italy discussed are economic forces, financial forces, physical and environmental forces, political forces and sociocultural forces. (Daniels, Radebaugh and Sullivan, 2007)

Economic forces are among the most significant uncontrollable forces for business. Firms have been assessing and forecasting the economic conditions for many years. In addition, economists and marketers use certain economic indictors to predict trends in their industry. Companies must borrow money occasionally and the inflation rate determines the real cost of borrowing. Inflation and interest rates are important in economic dynamics but not bottom line measures. Two important general measures of economic welfare are unemployment and the rate of growth in real per capita national income. When growth is slow, unemployment increases. The unemployment rate has a great impact. The level of imports is driven by the combination of the protection rate and the level of unemployment. When unemployment falls people seek more goods which are likely to be imported. Australia's real GDP is 4 per cent with an inflation rate of 2.2 per cent and unemployment rate of 7.5 per cent. Italy's GDP growth is 0.7 per cent, unemployment is 12.4 per cent and inflation is 4 per cent. Australia would be a better market at this time. Italy's employment rate and inflation rate being higher mean more people are not working, products are costing more and less people are purchasing goods and services. Italy's population is 56.5 million to Australia's 17.8 million. Product distribution and communications would be simpler and less costly in Italy if their economy improves. Italy has one of the highest population densities in Europe. (Daniels, Radebaugh and Sullivan, 2007)

National balances of payment, taxation, inflation and tariffs are all uncontrollable financial forces. Balance of payments are a very important indicator of what may happen to the country's economy including what the government may cause to happen. If the BOP is in deficit, inflation is often the cause. The amount of taxes paid is affected by inflation. Australia's inflation is lower than Italy by 1.5 per cent. A businessman would pay less taxes in Australia. Australia's exchange rate to the US dollar is 1.714 and Italy's is 1660.00. If you find a good exchange rate, the country's stability is a major factor as to how much your money is ...