Trading Environment of International Trade

  2. Economic Environment

Economic Environment refers to those economic factors, which have impact on the international trade.It includes economic conditions,economic policies,economic system,phases of business cycle,foreign investment,international organizations(IMF,World Bank,WTO etc.), international trade agreements etc. There are various international organizations, which issue various guidelines,make different rules and regulations for regulating international trade.Among these important organizations are international Monetary Fund,World Bank,World Trade Organization etc.

  3. Cultural Environment

In global business activities such as leading,motivating,decision-making,problem solving and exchanging information and ideas depend on the ability of managers and employees from one culture to communicate successfully with colleagues,clients and suppliers from other cultures.Mistakes in cross cultural communication often go unnoticed by the communicators,but these mistakes have potential to cause damage to international relationships and negotiations.

   4. Technological EnvironmentTechnological environment

Technological Environment like its counterparts political and legal has a considerable influence on international business.Technology has facilitated international business in at least six ways:

i. E-Commerce

The internet allows both small and big companies to expand their global presence at a lower cost than ever before.The internet makes it much easier for buyers and seller to find each other,wherever they may be located,and whatever their size.

ii. Telecommunications

Technology such as 3G,4G,MMS etc. have fostered closely knit global business.

iii. Transportation

In addition to developments in computers and telecommunications,several major innovations in transportation.In economic terms,the most important are probably the development of commercial jet aircraft and super freighters and the introduction of containerization,which simplifies trans-shipment from one mode of transport to another.

iv. Globalization of production of Production

Technological breakthroughs have facilitated globalization of production.A worldwide communications network has become essential for any MNC. Factors influencing the location of manufacturing facilities vary from country to country.They may be more favourable in foreign countries rather than in home country.

v. Globalization of Markets

Globalization of markets refers to the process of integrating and merging of the distinct world markets into a single market.This process involves the identification of some common norm,value,taste,preference and convenience and slowly enables the cultural shift towards the use of common product or service.

vi. Technology Transfer

Technology transfer and globalization are interconnected with each other. They are highly interdependent as well. The onset of globalization has brought up free passage of goods and services across the globe. The role of technology has also changed from time to time. It is currently considered as one of the important factors in the propagation of globalization. Technology transfer consists not only of various scientific researches and discoveries, but also the transformation of such researches and discoveries into practical and feasible applications or products. Technology transfer is one of the major aspects of globalization.

Trading Environment of International Trade

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