Image result for International EconomicsInternational Economics has many different areas that a company can use to ensure their success in an international market. Six key areas that a company should look into when going into an international market are a nation’s balance of payments, exchange rates, free trade agreements, trade barriers, stage of economic development, and their supply and demand for the specific product.
By analyzing these areas a company will have adequate information to make a basic decision as to whether or not they should continue investing time in gathering information on that country. Targeting the stage of a countries economic development will give a company a quick view of the nation and if their product even has a chance at being successful. Once this has been determined other areas should be looked at particularly the supply and demand for the product. Once it has been determined that a country will be able to support that product companies should pay close attention to the exchange rate and free trade agreements in order to capitalize in these areas and avoid financial loss. Although doing business on the international level seems like a daunting task many companies have done it successfully and have left trails of lessons on how to succeed.
International economics is a tricky subject that must be analyzed from several different aspects in order to get a clear picture of what is going on in different countries. Balance of payments can be used to see if a country is receiving more money than it is paying out and exchange rates come into the equation to determine the ratio for paying in different currencies. If a company wishes to secure a set rate they can forward hedge a rate to make sure their company will receive a stable exchange rate. Utilizing a free trade agreement helps companies avoid the costs of having to deal with outside governments as well as not having to pay tariffs, which is a form of protectionism. The basics of these issues can be boiled down to the relationship of supply and demand and how a government wishes to affect the supply and demand for certain goods in their country. Trading at the international level can be a daunting task but if a company reviews these six topics they will be able to get a grasp on which countries could make positive trade partners.

Post Comment