Barriers to International Business

Barriers to International Business

Natural resources are unevenly distributed in different parts of the world. This raises the need for these resources to be transported from the areas they are found in ,to where they are not found and are required . Also, some businesses may choose to relocate to where the resources are found to reduce the cost of operations.

When a business has been in one locality/region for too long, the domestic market gets saturated and the business may be forced to look for new markets to increase the demand of their goods and hence raise the profits. Businesses may also go global in search of cheap labour or to counter competition. This exchange/transaction of goods, services and resources between different regions or countries constitutes international business. International business has been on the rise in the recent past but it is faced by several barriers.

They include:

1. Import duties

These are taxes that federal governments impose on imports with the aim of raising government revenue and to limit the amount of imports hence protect local industries. Import duties raise the prices of the imported goods and hence lowers the demand for these goods.  Here is how import duties can affect international trade.

2. Quotas and embargoes

Quotas refers to the limit of the amount of certain foods to be imported in a country. They are aimed at limiting the amount of imports here protecting the local industries. Quotas lower the supply of the targeted goods, this increases the price of these goods and consequently lowers the demand. Embargo refers to the complete ban on specific imports and exports. Quotas and embargoes discourage the movement of goods across boarders and hence is a barrier to international business.

3. Cultural, social and language barriers

The values, beliefs and concepts of people vary from place to place. This affects the flow of goods and services in that a certain highly demanded product in one place may not appeal to people in another place. The religion and education status of the people also determines the type of products and services they need and hence limits international business. Language barrier is also an hindrance to international business since both the buyer and seller need to understand each other properly and come to an agreement concerning the goods or services.

4. Political environment

The political environment of a country is a great determinant of the level of international business with other countries. Political unrest usually leads to loss of property and hence businesses are reluctant to move into politically volatile countries. The political and diplomatic relations between different countries determines how they trade with each other and the policies passed to promote or discourage this trade.

Various businesses and companies are going international. International business is flourishing now than never before. With technological advancements and relaxed trade barriers by most countries, international business can only grow bigger.

Expand Your Business to the European Market

Expand Your Business to the European Market: 3 Key Considerations to Make

While making a decision to expand your business into a new market can be a demanding task in itself, the process by yourself without consulting an expert can be costly. Europe, with over 500 million consumers spreading across 28 countries, and with an ever-improving, well-defined free flow of goods, provides a market that’s difficult for a small growing business to ignore.

If indeed you have a viable business idea, a growing business, or an already established business somewhere outside the continent Europe, you will probably have a viable market in Europe.

Below are three key considerations you should make before you expand your business into the European market.

Use valuable online research tools and resources

While thinking of opening a new business branch in Europe, you should consider using trusted online foreign exchange services to handle your currency conversions. Most online FX services offer relevant resources as well as helpful tools, and on top of the list are free online currency conversion and 24/7 customer service.

With affordable markups and absolute transparency, you will always know where your funds are at as far as the payment process is concerned.

Consider all European rules, regulations, and guidelines

Even though you can do business freely in Europe once you set it up, it’s important to know that EU has a broad range of regulations with which your company must comply. In addition, if you’re a british company, the implications of Brexit means you might have to think about EU regulations for international businesses

For instance, most of the products destined for Europe must have a CE marking to indicate that, a product -regardless of its size or value, meets all the EU safety, health, as well as environmental protection requirements. And if your company intends to sell chemicals or pharmaceuticals, you must register it under and comply with the European Union REACH (Registration, Evaluation, Authorization, and Restriction of Chemical substances) regulatory guidelines.

Moreover, whereas some European countries have introduced requirements such as filing annual tax returns, other countries have a value-added tax. Most of these countries will also require that you combine an annual audit or annual filings and quarterly filings with regional authorities.

And as a prospective European Union entrepreneur, you will have to learn about the continent’s foreign tax obligations as well.

Register your business with a development agency

Once you have identified your ideal business country or region in Europe, you will have to contact regional or national development agencies to get relevant information regarding to local regulations and requirements to guide your operation in the E.U

The European market is more than open to businesses from other continents now than it has ever been. It’s now upon you, as a business owner looking to go international, to take a step forward and expand your business.