The Impact Of International Business On Business Environment

1633 Words Sep 26th, 2016 7 Pages
If the firms, which enter the international market, are ineffective at risk management, this is a risk in itself for Governments, as it can lead to economic inconsistencies. International business differs from domestic business for a variety of reasons, including as culture, labour and environmental standards, foreign exchange and political, economic and legal systems. The main reason for why there is such a significant difference between the two types of business is due to the increased risk associated with international business. The main risks, which can influence a firm’s decision to enter an international market, include the political, economic, legal and competitive risks. If these risks are successfully managed, it will lead to economic consistency, however, if they are unsuccessfully managed, this can have detrimental consequences for the government as well as the firm. Political risks include the likelihood that political forces will cause drastic changes in a countries business environment that adversely affects the profit and other goals of the firm. Economic risk is the likelihood that economic mismanagement will cause drastic changes in a countries business environment that unfavourably impacts the success of a business enterprise. Furthermore, legal risks involve the likelihood that a trading partner will break contract or expropriate property rights, as well as create inconvenient circumstances for multinational firms. According to Staff (2009) “This directly…
Open Document