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    Factors that Affect Global Economy on International Business

    University: University of CHESTER

    • Unit No: 5
    • Level: Undergraduate/College
    • Pages: 7 / Words 1741
    • Paper Type: Essay
    • Course Code: BUST10004
    • Downloads: 380
    Question :

    This assessment will cover following questions :

    • Discuss with examples of how the growth in international trade is impacted by the factors affecting the global economy.
    • International Business Machine Corporation (IBM) is a multinational technology corporation. Evaluate how the global business environment impacts the growth and development of international business.
    • Explain how the political environment and ecological considerations affect international business decisions in International Business Machine Corporation (IBM).
    Answer :

    INTRODUCTION

    Business is defined as the actions that are performed by the business organization or enterprise to get engaged in commercial, professional and industrial activities. Purpose of these organizations to full fill their specific business goals. Profit of organization depends on type of organization. International business can be explained as cross border transaction of services and goods (Meyer and Peng, 2016). This process also can be considered as globalization. International Business Machine Corporation (IBM) is an international organization which was established in year 1911 by Charles Ranlett Flint and Thomas J. Watson Sr.. the Headquarter of IBM is in Armonk, New York U.S. This report will be explaining the influence of various factors that can affect global economy on international trade (Meyer and Peng, 2016). The impact of global business environment on growth and development of international business will be evaluated in the study.

    MAIN BODY

    Influence of Various factor of Global Economy on International Trade

    Role of global economy is most important for the international trade of the organization. There are some factors that can affect the global economy (Hamilton and Webster, 2018). These factors that can affect global economy also have huge impact on growth of organization in international trade. Some of main factors that can affect global economy are- Natural Resources, Infrastructure, population, labour, human capital, technology and Law. These factors can affect the global economic stability. Each factor can affect the global economy in different manner. This is how these factors indirectly affect global trade in international business. The global economy and international trade are connected to each other (Cravino and Levchenko, 2017). Stability in global economy can provide better opportunity to IBM to improve their international deals with high effectiveness.

    Natural Resources

    Natural resources are limited in quantity and this is not possible to maintain stability in international economy with finite resources (Strange and Zucchella, 2017). This is difficult for the international authorities to manage the international economy with little amount of resources. Natural resources like Gold, Crud oil and other minerals provide strength to economy of various countries. It is also related to the utilisation of natural resources to to maintain supply chain in international market (Collinson, Narula and Rugman, 2016). For example if a nation have limited amount of resources than their economy will be in critical condition. They will might face economic crisis on national & international economy and it also can affect global economic stability (Beugelsdijk, Kostova and Roth, 2017). This is how the natural resources can affect affect international trade by reducing opportunities in international market by affecting global economy.

    Infrastructure

    Infrastructure is one of the most important factor for national and global economic stability (Cantwell, 2017). Without specific infrastructure this is not possible for various organization to maintain supply chain in efficient way. It can cause major impact on the international market and economy. Less capable infrastructure can affect the international trades by reduce the limits of global market. For Example if an organization do not have enough capable infrastructure then they will not be able to maintain their supply chain in Global market in it will affect the global economy (Di Giovanni, Levchenko and Mejean, 2017). This instability in global economy can cause major impact on global trade opportunities for various countries.

    Human Capital

    The human capital is also one of the most important for different business organization (Brannen, Piekkari and Tietze, 2017). Effective and skilled work force provide greater opportunity to organization like International Business Machine Corporation to provide better quality products and services in the international market. It also can provide better opportunities in the global market to various organization to increase number of international or cross border trade which is performed by them (Buckley, Doh and Benischke, 2017). This is how economic stability due to better human capital can improve global business conditions to get better result in international trade market.

    Population and labour

    Population is a major factor that can affect international economic stability and opportunities (Teagarden, Von Glinow and Mellahi, 2018). Growing population can be consider as availability of more employees and labour. This high availability can also lead to the condition of unemployment and low average income of people. This how it can affect international economy. It can increase the demand of products on the international level along with fall in price of product. It will slightly reduce the marginal profit of company.

    Technology

    Technological growth of organization can provide better opportunities to gin larger profit (Tenzer, H., Terjesen, S. and Harzing, A.W., 2017). Technology which is capable of performing various type of work with higher efficiency, can reduce the operation cost of company and it can help them to gain high marginal profit. This thing can help the organization I long business run. This is how market stability can improve global economic conditions and opportunities to perform global trade. That is how technological development can improve the conditions for global trade (Derudder and Witlox, 2016). For Example better technology that is used by International Business Machine Corporation will improve their marginal profit and provide them financial capability to contribute more in the global trade.

    Political Instability

    This is one of the most important factor for the organization and economic stability (Aguinis, Cascio and Ramani, 2017). Political instability with in international economy can affect various investors and hinders investments. Politically instability can reduce the opportunities for organizations like IBM in international market and it can reduce the business possibilities for company in international trades. For Example Political Issues like Brexit can affect the investment possibilities of investors in international market and trade.

    You Can Also Check - Business Ethics and Responsible Management - Vodafone

    Impact of Global Business Environment on Growth and Development of Business

    Global business environment is considered as environment in various independent countries that is affected by different external factors of global business (Alcácer, J., Cantwell, J. and Piscitello, L., 2016). Some of the main factors of international business environment that can influence growth and development of business. These factors are Political factor, economic factor, social and cultural factor, technological factor, environmental factor and legal factors. These are most common factors that are need to be considered in order to known their influence on the growth of business organization.

    The role of political decision in huge on the growth and development of business organization in the international market (Alcácer, J., Cantwell, J. and Piscitello, L., 2016). There are different decisions are taken by government to maintain economic and political stability in country. For this purpose they make various changes in tax policy, foreign policy and trade policy. This changes made by government can cause both positive and negative impact on the growth of organization like IBM Corporation (van Hoorn and Maseland, 2016). For Example situation like Brexit can reduce the possibilities of business for IBM in international market and negatively affect their growth. The economic factors are also crucial for IBM in international market (Beugelsdijk, Ambos and Nell, 2018). Economical instability like situation can reduce number of opportunities that are available for IBM in global market. The negative impact of Brexit has affected investors in UK market. This reduced investments of investors can reduce the possibility of growth and development of organization by causing financial barriers.

    The social and cultural factors are also crucial for organization (Kourula, Pisani and Kolk, 2017). Factors like education standard of people and their skills can provide better opportunities to IBM and allow them to make positive change and development in organizational practices. This is how social and cultural factors can improve conditions for company like IBM to develop their business capabilities and performance in international market. Technological factors are most important for organization. Technological development in organization can improve their operations and production capabilities (Verbeke and Ciravegna, 2018). This also allows the organization to improve their decisions related to growth and development.

    In the current time sustainability is major environmental factor for organization. This is important for the organization like IBM to manage sustainability in operations (Zellmer-Bruhn, Caligiuri and Thomas, 2016). People are more concerned on environmental stability. Theses sustainability factors can increase the production cost of company immediately but for long run this can help the organization to grow and develop its business in the international market. Some legal factors also can affect the growth of International Business Machine in the international market. The legislation that are designed by the legal authority of organization can force company to make certain changes in their operations to prevent negative impact of business practices on economy of country and protect rights of people who are associated to company (Hutzschenreuter, Kleindienst and Lange, 2016). This is strict legal norms can force the organization to make changes in their business policies and decision making process to full fill all legal requirements. This is how legal and environmental factors can affect the growth and development of IBM in international market by increasing barriers in business process for global market (Kingsley, Noordewier and Bergh, 2017).

    CONCLUSION

    This report is concluding information about various factors of international economy and their impact on the international trade conditions. The impact of these factors has been analysed and evaluated for the international possibilities of International Business Machine Corporation. By using the concept of international economic stability trade possibilities has been evaluated for organization. The importance of growth and development for organization has been analysed in report. International business environment has been studied and respective factors has been analysed in the order understand their impact on performance, growth and development of IBM Corporation. This is how various aspects related to International Business Machine Corporation has been analysed and evaluated to develop various business strategy for the organization.

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