Internatioanl Business

Product Life Cycle:

1. Development- Creating and designing a product to get ready to enter a market. Usually involves researching the market and the product itself.
2. Introduction- When a product enters a market and is promoted heavily to gain attention from the target market, can also involve pricing strategies in particular penetration pricing.
3. Growth- When a product sells increases due to positive effects from promotional strategies
4. Maturity- When the product reaches its peak in sells and begins to slowly decline. Product extension strategies are introduced to down the rate of decline and artificially extend the products life.
5. Decline- When sells drop and the product becomes unpopular.

Economic factors and how these affect Businesses:

Inflation- Will affect Businesses by forcing them to rise the price of their products at the same rate as inflation has gone. It can cause the supplies and raw resources that the business buys, rise in price at the same level as inflation also causing the running costs to increase which may cause a business to further rise its prices.

Interest rate- Will affect businesses as it will persuade them either to take out a loan or not. This is because if the interest rate rises then less businesses will likely take out a loan because they will have to pay back more whereas if the interest rate was low businesses would be more likely to take out a loan because they will pay back less.

Unemployment- If unemployment is high then it will allow for a surplus of workers for a company to hire allow for greater choice to find the best person for the job/s on offer at a company also allowing for the company to offer low wages due to the high demand for the job on offer. If unemployment is low then then a business will have limited choice in who they want to hire with wages being high.

GDP- If GDP is low then it means that consumers in that company will have less disposable money to buy consumer goods resulting in either sales being low or forcing the business to lower its prices which will cause it to lose revenue reducing profits.

Imports & Exports- Can come with tariffs and quotas that will restrict the amount of goods that businesses can trade while also taxing the business for the amount of goods that it has in the docks which will lower its revenue.

Exchange Rates- Will affect the value of  currencies in countries influencing whether a business is best off importing or exporting in a certain country. So for example if the Pound was strong compared to other currencies it would be best for that business to import goods as it means that the business would be able to import goods cheaper as they would be getting more for their money. However due to the strong Pound it would be unwise to export goods as they would be expensive for other countries who would therefore buy less reducing revenue. 

Taxation- Varies with countries the rate of taxation but generally it is in a businesses best interest to be set up in a country that has lower rates of corporate tax and income tax (two main forms of taxation). This is because it will allow for the business to keep hold of a larger amount of its revenue and profits that can be used grow the business.

Uncertainty in the Economy

This has come from the development of globalization through the way in which competition can come from anywhere with little warning. This means that that competition can be very fierce reducing efficiency in the market, as a result unfairly driving out smaller businesses. This can make business planning a lot harder which can cause companies to lose huge amounts of money.
Uncertainty also relates to natural events that cannot be predicted or stopped which can have devastating effects on businesses, regardless of whether they are big corporate MNCs or small local businesses costing them to lose millions. An example of such event was the Icelandic Volcanic eruption in April 2010 which formed an ash cloud that blocked the skies, stopped all air flights over the Atlantic and Europe due to it being unsafe. This caused air companies like British Airways to lose millions while helped to boost the market in other travel sectors like trains and ferry services.

Changes in China's economy over the last 30 years

Over the last 30 years China's economy has changed dramatically, from a centrally planned system that was largely closed to international trade to a more market orientated economy. It has had a rapidly growing private sector and is a major player in the global economy, having the second largest economy in the world with Goldman Sachs predicting that it will over take the USA's economy by 2030. The exponential growth of the private sector has been due to the result of privatization of many state-owned companies in the late 80s and 90s due to the Chinese government ease back on regulations at the time. The private sector allowed for a major policy change to welcome Foreign Direct Investment, multinational corporations as well as Special Economic Zones, which had a major impact on China’s economy through attracting more trade to enter the varying markets in China, helping to raise taxes for the government, which were spent on infrastructure to increase economic growth.

BRIC Economies

The BRIC economies are the fastest growing economies in the world , Brazil, Russia, India and China and are predicted to have the biggest economies in the world by 2050. The group was made up by Goldman Sachs in 2003 who  have stated that the BRICs are already having huge influence in world economics and that in n the next decade global economic growth will reach its peak. It has stated also that the BRIC's exchange rate will appreciate by near 300% by 2050 helping to give investors huge rewards in the coming 45 years.

FDI and how this benefits an economy

Foreign Direct Investment is when foreign companies invest in a country to buy any kind of business, land, factories or mines. FDI benefits an economy by attracting more trade to enter the market that they have invested in, which would generate more taxes for the government of that country. More job opportunities will be created in the country as a result of FDI, helping to reduce the rate of unemployment. FDI helps to increase the growth of businesses in markets which increases the populations' income, increasing the amount of disposable income that the population has and can use to buy consumer products, helping to move and grow the country's economy, increasing GDP as well as reducing uncertainty in markets as it will less elastic to change.

Economic Reform

Are changes that take place in an economy in an attempt to raise growth which usually affects economic factors like inflation, interest rate, unemployment, etc. It usually involves governments becoming more or less influential in the way companies carry and do business. This can involve governments creating SEZ (Special Economic Zones) which are regions that have no or very few economic and other laws to make it a free market orientated region which differs from the countries typical or national laws in order to attract FDI.

Trade Agreements & Alliances

Governments will make agreements with each other to establish guidelines for international trade and to set up alliances, e.g. the European Union (EU). The benefits that this gives to governments are:
-An increase in competition
-A reduction in risks and uncertainty
-Loyal Channel of consumers
-Economies of scale
-Diversification
-Easier distribution
-Cheaper labour
-Material /supplies at a cheaper rate
- Imports and Exports increase
-Freedom over job prospects i.e freedom of moving between nations for migrant workers,
-Single currency opportunities like the Euro.

How do customers and producers benefit from International Trade

The benefits International Trade provides to producers is a wide range of consumers allowing for a larger market share to be obtained due to the ability to range a wide target market, helping to maximize profits. Producers will be able to gain access to cheaper raw materials bringing down their running costs, it helps to increase communications between different producers world wide allowing them to know what competitors are up to gaining a competitive advantage. Producers will gain access to to cheaper labour. The benefits that customers gain from International Trade are high quality products due to the increase in competition increase communications allowing for friends and family to become more inter connected. The accessibility of products is made easier  allowing for consumers to gain greater opportunities to buy a varied amount of products. Helps to provide more job opportunities for customers reducing unemployment and increasing disposable income.

Protectionism

Is economic policy by governments to restraining foreign businesses that enter their domestic market in order to protect their local business from being bullied or pushed out of the market. This can involve governments putting tariffs on imported good, having restrictive quotas that limits the amount a business can import/ export out of the country and regulations can be implemented to allow fair competition between imports and goods and services produced domestically.
The advantages and disadvantages of protectionism is that it helps to maintain capital for domestic businesses, stops the exploitation of certain industries, prevents monopolies occurring giving consumers greater opportunities  protects the interest of international businesses in some cases. However their can prevent or limit companies from making a large market share and therefore limiting growth, similar choices and prices reducing the opportunities of consumers, there are substantial fines for over exceeding Quotas and can put some international businesses off entering an economy.

Single Market

Is a type of trade bloc which is composed of a free trade area with common policies on product regulation, and freedom of movement of the factors of production and of enterprise and services. Describes the EU project to create free trade within the EU and mold Europe into a single economy.

The advantages of a single market are Consumers have lower prices, more choice, and opportunities for work throughout the EU and businesses have more consumers and are able to exploit economies of scale.

The disadvantage of a single market is that the actual mobility of workers is not ideal in reality in reality, many businesses still incur barriers of entry and exit and monopolies may be formed as a result of market failure.

Factors affecting businesses moving into international markets

This would involve levels of economic development in the international market which is best measured under the Human Development Index because it maybe important for businesses seeking new markets or a place to manufacture as well as access to education in a country for businesses that will wan ti hire skilled workers.  The Government policy would affect where businesses move for international markets as the amount of tax that a country charges is important for businesses as it affects the amount of revenue that comes into the business, indicating the amount of Protectionism in a country.
The ease of setting up a business looks at a range of factors that make a business easier to start and run. The higher the ranking the easier it is to do business, where regulations are better, simpler and easier to comply with and there is a strong protection for business property rights.