The International Business Environment Paper Example

Introduction

International business environment is a broad chapter that is selected entirely for the discussion of all the surroundings of the international business which is Next plc. Next plc is a British based company that deals in the buying and selling of homeware and most clothing. Next Plc is the leading merchant of clothes mostly in the United Kingdom with over 400 stores across the countries. Apart from these, Next plc has over 200 stores in Asia, Europe and the middle east where it is the largest cloth retailer. Next is successful in these countries due to the favorable political stability within the countries and the higher purchasing power especially in the middle east. Through this environment, next is able to advertise and brand in different forms through wholesale, retail, and online platforms.

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Next plc started off as a tailoring company which was situated in England. In later years the business expanded where they were able to produce for Ireland. With the major clothing manufacturers based in England and Ireland, Next is able to supply to more than 300 stores in Europe that are their franchisees. Although Next has suffered tremendous losses in its expansion, it still manages to stay relevant due to the clever branding strategies employed, for example, the opening of an online platform where the customers are able to log in and order for clothes and equipment after which they are shipped. The platform has more than 3 million active users which are advantageous and global.

As next opens the chain store and grants the rights to sell its products to the franchisees especially in the countries of the middle east, there is the creation of employment hence the raising of the national income at large. The franchisees get a chance to operate the business and earn profits from the goods that are outsourced from Next's stores.

Mechanisms that regulate international trade.

Since there has been a high increase in trading activities internationally, there has been the need by countries to regulate the trade that takes place between the countries of a particular region or continent. The trade between these countries is regulated by means of mechanisms that are imposed as laws within the jurisdiction of the particular state. Some of the mechanisms that are used by the countries include; free trade, trade barriers, economic blocks embargoes among others. Free trade is a technique used by any two or more nations for their business people to voluntarily transact business without imposing any restrictions or tariffs. With free trade, the economies of the nations get a chance to boast faster growth rates and their business people may concentrate on manufacturing goods or services that are to their competitive advantage. Through free trade, the economy expands through the diversity of products.

Trade barriers are also a mechanism that is used by nations to control trade internationally whereby the government induces some restrictions that take the form of taxes hence the raise the cost of the equipment being traded in. Trade barriers pose an advantage since the government is informed about the particular commodity. On the other hand, trade barriers limit the potential growth of a country's economy since it limits the quality. Due to the increased cost of shipping and taxes, the cost of low-quality goods become high hence posing a disadvantage to the citizen.

Embargoes are also a common mechanism which is a ban by a country to trade in a certain area or on certain commodities. Embargoes are imposed to prevent the dealing of illegal goods such as military ware. Embargoes are powerful tools used to influence a countries economy as well as its political prosperity.

The mechanisms are used by any country to as a means of control of products. Many countries could also come together to restrict trade among countries as a humanitarian initiative for the sake of international peace.

Comparing methods of increasing or reducing trade.

From the previous topic, the mechanisms are used in the regulation of trade internationally could either allow trade or restrict trade. Some of the mechanisms that allow trade to take place include free trade areas and economic blocks. On the other hand, the mechanisms that are used to restrict trade include; trade barriers, quotas, tariffs and embargoes. The United States has signed major free trade agreements with Asian nations over the years in a bid to reduce the trade restrictions between them and the partnering nations.

For instance, in 2006, the United States signed an agreement with South Korea to eliminate 95% of each nation's tariffs imposed on goods hence bringing together 362 million consumers in both countries. This resulted in the division of labor within the countries and more so the creation of a market economy due to the division in the factors of production. North Korea on the other hand, has a command economy where all the trading activities are run and commanded centrally. The distribution of food, as well as clothes and farming produce, is done by the government. From this command economy, the growth of North Korea has been restricted to what the government has to offer since there is limited privatization and excess quotas and embargoes on the importing of goods and merchandise for the local business people.

For North Korea to improve its trading activities, it should lift the tariffs and encourage a market economy through the implementation of free trading blocs within the country. Also, the country should join with at least two or three trading blocs within the Asian continent so as to foster economic growth.

Describing the culture and environment internationally.

As the companies in different parts of the world envision expansion and globalization, there has been drastic changes in the culture and business environment in the participating countries. Through globalization, Next plc has been able to devise new and innovative ways of transacting business in the different market settings. However, culture language and the religion pose resistance to the type of business venture that is required. Communication and language are key to the success of a business venture internationally. English is the most widely used language in business globally but some parts of the world are not well conversant with it. For instance, the Indians are more indirect in their pronunciation and the may pay attention to details in their description. Professionals from Finland are briefer in their explanations and value directness.

On the workplace environment and culture, countries like Germany and Japan have strict workplace rules hence this may be an advantage to a company that wants to expand in those countries. On the other hand, Scandinavian countries, as well as the Mediterranean countries, value leisure and the concept of organizational hierarchy which may be a cultural disadvantage to globalization. The attitudes of one country which are locally accepted may be illegal in another for instance the case of pseudoephedrine in Japan where it is illegal yet the compound is available in normal Vicks inhalers worldwide. Other environmental factors that may affect international trade include weather and climate changes, for instance, the winter clothes that are manufactured for the United Kingdom may not be applicable in India since India experiences mostly hot climate.

The culture in Barbados about camouflage shorts is also of importance since in that particular country it's reserved for the military. A business of shorts may not prosper in such a place. China is quite a religious country with more than 7 diverse religions spread across the country. Selling shirts with overtly religious statements in this country may be considered offensive since the shirt may be one-sided in terms of the religion. Changes in culture and environment should be approached with care and sensitivity in order to reap maximum benefits from the target population.

Comparing cultural differences and foreign business environments.

The countries that have been selected for this section ae the United States and Japan. The Japanese economy has been identified as industrial, free and lively market economy. The value of work in their culture goes beyond the economic benefit involved and most of the individuals believe that the outcome matters as much as the process. Generally, companies in the US are faster and smoother in times of decision making since they have granted the mandate of speedy decision-making capabilities to the junior staff. On the other hand, the Japanese foster the critical thinking and conservative methods of decision making which involves a lot of meetings and is time-consuming. The culture in the US is also individualized and the economy focusses on the effectiveness of an individual, while in Japan teamwork is encouraged while every team player is analyzed according to their participation in the team. These two approaches to labor and staffing pose contrast in the general sustainability of the economy.

The US economy consists of risk-taking individuals who believe in their potential to deliver 100% even if the probabilities are at 50-60%. In contrast, the Japanese entrepreneurs believe in accuracy hence they only embark on projects and make decisions when the probability of success is at 100%. From the analysis of the two diverse business cultures, Next plc could be able to harness the particular country's strengths and grow both locally and internationally in their sales strategies and operations as well.

Evaluating the impact of cultural differences on international trade.

Culture is an important aspect that must be considered in order for the company to decide to go global or not. For instance, if the company sells pork and other pork products, the company may not consider selling its products in the middle east nor expanding towards that direction since the countries are mostly of Islam culture and religion. In this case, Next plc is expected to grow and expand its markets to countries other than the United Kingdom like India and other Asian nations. The clothes that were previously manufactured for the cold weather will not be shipped to these countries since the heat is immense and the climate is also hot. The clothes that may match the climate in the company's target market for expansion may require some conditioning in order to maintain its selling ability. Changes to the color and maybe the size of the clothing could be adjusted considering that most of the Asian people are not as large in size.

The price of the clothes to be sold by Next plc may also need to be recalculated in order to fit the economic status of the target country. By doing this, the company may earn favorable amounts of profit since their commodities will be affordable by the majority population. The concept of culture may also affect the recruitment of a workforce in the target nation. For some countries, it will be easy since they may not recognize the need for hierarchy in the organization of the company. In some others, the junior staff may not work effectively without the intervention of a senior staff. For Next plc to survive the globalization, the issue of culture must be addressed in all dimensions especially in terms of finance, human resource and, organizational planning.

Describing the monetary environment in international business.

Monetary environment can be described as the policies that are adopted by a particular country in deciding the expansion or reduction of its supply of money. For international business, the monetary environment is essential since it affects the amount of money that the business will realize in terms of profits. The monetary environment involves factors like foreign exchange, the bal...