Global Business Environment

Question 1

Factors driving global business development

Answer 1

Financial growth opportunities/loss minimisation:
Businesses expand globally to take advantage of financial growth opportunities and reduce the risk of losses.
Entering international markets allows companies to access new customer bases, leading to increased sales and revenue. Additionally, businesses can benefit from lower production costs in certain countries, improving their profit margins.
Expanding globally also helps in spreading financial risk—if one market experiences an economic downturn, the company can rely on revenues from other regions to remain stable.
By diversifying their operations, businesses can minimise losses and ensure long-term financial sustainability.

Consumer Purchasing and Spending Patterns:
Understanding consumer purchasing and spending patterns is crucial for businesses considering global expansion.
Different markets have varying levels of demand, influenced by factors such as cultural preferences, economic conditions, and income levels.
Businesses conduct market research to identify regions where their products or services are highly sought after.
For example, a luxury brand may target high-income countries, while an affordable consumer goods company may focus on emerging economies.
By aligning their strategies with local spending behaviors, businesses can successfully enter new markets and drive global growth.

World Trade Organisation (WTO) Regulations and Sanctions:
The World Trade Organisation (WTO) plays a significant role in facilitating global business development by setting international trade rules.
The WTO promotes free trade by reducing tariffs, resolving disputes, and ensuring fair competition among member countries. Businesses operating in WTO-compliant markets benefit from fewer trade barriers, making it easier to export and import goods. However, trade sanctions imposed by the WTO or individual governments can restrict businesses from entering specific markets, limiting their growth opportunities.
Adapting to international trade regulations is essential for companies seeking long-term success in the global marketplace.

Deregulation of the Financial Market:
Deregulation of financial markets encourages global business expansion by removing restrictions on international transactions and investments.
Many countries have eased government control over financial activities, allowing businesses to access foreign capital, secure funding, and engage in cross-border trade more efficiently. With fewer regulatory barriers, businesses can operate in multiple markets, take advantage of foreign exchange opportunities, and establish global supply chains.
Additionally, deregulated markets attract foreign direct investment (FDI), creating opportunities for multinational companies to expand their operations.
By leveraging deregulated financial markets, businesses can enhance their growth potential and competitiveness on a global scale.