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Example research essay topic: Trade And Investment Goods And Services - 1,986 words

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Environmental Forces In the business market there is so much competition that companies sell outside the country to increase sales. Increasing internationalization of business is requiring managers to have a global business perspective and an understanding of the differences in the environmental forces of the markets in which they operate. Decision making in the international environment is more complex and having an understanding of the external environmental forces enables international managers to be alerted to new opportunities. External forces are commonly called uncontrollable forces.

Although managers have no direct control over external forces, knowledge of these forces will better prepare them for greater success in the international business environment. Five of the uncontrollable forces to be identified and their impact on Australia and Italy discussed are economic forces, financial forces, physical and environmental forces, political forces and sociocultural forces. Economic forces are among the most significant uncontrollable forces for business. Firms have been assessing and forecasting the economic conditions for many years. In addition, economists and marketers use certain economic indictor's to predict trends in their industry. Companies must borrow money occasionally and the inflation rate determines the real cost of borrowing.

Inflation and interest rates are important in economic dynamics but not bottom line measures. Two important general measures of economic welfare are unemployment and the rate of growth in real per capita national income. When growth is slow, unemployment increases. The unemployment rate has a great impact. The level of imports is driven by the combination of the protection rate and the level of unemployment.

When unemployment falls people seek more goods which are likely to be imported. Australia's real GDP is 4 per cent with an inflation rate of 2. 2 per cent and unemployment rate of 7. 5 per cent. Italy's GDP growth is 0. 7 per cent, unemployment is 12. 4 per cent and inflation is 4 per cent. Australia would be a better market at this time. Italy's employment rate and inflation rate being higher mean more people are not working, products are costing more and less people are purchasing goods and services. Italy's population is 56. 5 million to Australia's 17. 8 million.

Product distribution and communications would be simpler and less costly in Italy if their economy improves. Italy has one of the highest population densities in Europe. National balances of payment, taxation, inflation and tariffs are all uncontrollable financial forces. Balance of payments are a very important indicator of what may happen to the country's economy including what the government may cause to happen. If the BOP is in deficit, inflation is often the cause. The amount of taxes paid is affected by inflation.

Australia's inflation is lower than Italy by 1. 5 per cent. A businessman would pay less taxes in Australia. Australia's exchange rate to the US dollar is 1. 714 and Italy's is 1660. 00. If you find a good exchange rate, the country's stability is a major factor as to how much your money is worth.

Australia and Italy are much more stable than countries such as Brazil or Nicaragua which are quite volatile. If their government should be overthrown your money would be worthless. Australia is the second lowest taxing country in the OECD (Organization for Economic Cooperation and Development). Their corporate tax rate has been reduced to an internationally competitive flat 33 cents on the dollar.

When goods are imported in the knowledge that they will be further processed in Australia and then exported, there is an export concession scheme which allows importation without the payment of import duty or sales tax. Inflation and interest rates have had a steady decline in Italy since 1992 which largely benefits the real economy of the country. The soundness of the Italian economic system has been proven by the success of external trade. Barriers still remaining in banking and insurance should be eliminated in the next two years. Italy is very attractive to foreign investors willing to establish themselves within the Single European Market. Movements in Australia's exchange rate and falls in the inflation rate have made Australia about 29 per cent more competitive.

Location of a country and surface features such as mountains, plains, deserts and bodies of water contribute to differences in economies, cultures, politics and social structures which make physical and environmental forces important. Eighty per cent of the continent of Australia lies in arid or semi-arid climatic zones. Classified as desert, it is one third drier than all other continents except Antarctica. Because of its geography, Australia's population has tended to concentrate along the coastal areas in and around the state capitals which are also major seaports and in the southeastern fifth of the nation where more than one half of the population lives. This gives Australia one of the highest percentages of urban population in the world. The distances between these cities and the fact that they are seaports make coastal shipping preferred over road and rail transportation.

These long distances between major markets result in transportation accounting for as much as 30 per cent of the final cost of the product as compared with the more usual 10 per cent in Italy. Cargo can be transferred quickly to truck or rail anywhere in Australia thanks to the new standard gauge rail connection road network. Long distances also present major challenges to the development of efficient communications networks. Italy is situated in the South of continental Europe bounded by the Mediterranean sea with common land borders in the north with France, Switzerland, Austria and Slovenia and is in a central position for access to Europe, North Africa and the Middle East.

Italy has typical Mediterranean climate with mild rainy winters and hot dry summers and is characterized by plains (23 %), hills (42 %) and mountains (35 %). Because Italy has one of the highest population densities in Europe it cost less for international business people to market their products and more people are available for employment. The most heavily populated areas are the Po-Veneto plains along the river-Po, areas around the larger cities such as Rome and the coastal belts. Italy has few natural resources. With much of the land unsuited for farming it is a net food importer. The lack of fossil coal forced the country to build hydroelectric power stations.

For energy purposes, Italy supplements its shortage of hydrocarbons by large-scale importation to supply refining centers close to the principal ports. The Italian inland waterways are little used for transport due to their rather limited and variable flow, but their six major seaports are utilized along with thirty-five smaller ports for coastal shipping. Italy has an efficient and economical railroad system that offers easy access to Northern Europe. New industries would probably be attracted to Italy because of the population density, mild climate, and many seaports for easy shipping. There are various types of risks to private business posed by political forces. The political climate of the country in which a business operates is as important as the country's topography, natural resources and climate.

Australia's system of government is based on the liberal democratic tradition. Like the United States, Australia has a written constitution. The Australian constitution defines the responsibilities of the federal government, which include foreign relations and trade defense and immigration. The Australian government is boasting that it has gone further than any government in the world in privatizing its job programs. Australia's government is an important source of funds for World Vision Australia relief and development projects. They make these funds available through the Australian Agency for International Development -AusAID.

The funds raised from AusAID are used for relief and development projects in Africa, the Middle East, the Asia-Pacific region and Latin Americas. The government has promoted increased trade and investment. The national Trade and Investment Outlook Conference was established in 1993. NTIOC played a vital role in introducing Australia and Australian enterprises to the world. Market Australia, also a recent initiative of the government is raising the perception of Australia's capacities in sophisticated goods and services. Political violence is not a threat to foreign investment in Australia unlike Italy.

In Italy there have been frequent government turnovers since 1945. Between 1992 - 1997 the Christian democratic party dissolved the Italian People's Party and the Christian Democratic Center emerged. Italy has had serious problems with corruption ranging from multimillion dollar tax fraud to payoffs for basic government services and numerous businessmen and government officials have been found guilty of corruption. Widespread distrust of government and entrenched bureaucracy suggests that eradication of corruption will be a long-term process. The armed forces have been used for combating organized crime.

The strong presence of organized crime has encouraged an attitude conducive to corruption. The Italian government is to a great degree into business. It owns companies in many industries including mining, railways, banking and restaurants. The Italian government owned Institute for Industrial Reconstruction lost billions of dollars, but the operations turned around as a result of the change in politics, continuing eradication of corruption and new management; a signal to privatize as much of the company as possible. The government announced a major privatization program to reduce the role of the state in the economy. Italy is involved in many international organizations to include the United Nations, World Health, World Trade Organization and International Bureau of Education.

Italy's political environment is on the rise after many years of instability and corruption. The political climate in Australia is more sound. The Australian government is providing a firm foundation for doing business and offers major incentives to domestic and international business. Sociocultural forces play a significant roll in international business. International businessmen must be students of culture to be successful in a foreign business environment. It is important to understand a cultures sense of beauty and good taste, music, art, dance, religion, language, beliefs and education.

Italy is rich in tradition, history and culture. The majority of the population speaks Italian and the religion of the country is Roman Catholic. Europe's Renaissance period began in Italy. Literacy achievements exerted a tremendous and lasting influence on the development of Western Civilization, as did painting, sculpture and architecture. Italian composers were a great musical influence. Its important for potential businessmen to know that the traditional holiday month is August and most factories close during this month.

Shops and services are open generally from 9 a. m. to 7: 30 p. m. Monday - Saturday. Italian shoppers still prefer to walk to their local supermarkets, thus packaging is smaller and lighter.

Also brand loyalty is high and Italy has one of the lowest levels of penetration of private labels in Europe. There has been a new popularity for snack foods which has pushed up demand for fast food outlets. There are still considerable pockets of illiteracy which is important for advertisers to know. Australia is a multicultural society. Two out of three Australians live in major urban areas.

Australia has a tradition of religious tolerance. About three-quarters of Australians are Christians, Roman Catholic or Anglican. Many other faiths are followed including Jewish, Islamic and Buddhist. An international businessman in Australia will have to understand the religious beliefs and constraints of a variety of religions and be able to adapt business practices. Twenty-three per cent of the population were born overseas.

Businessmen would be dealing with and needing to understand many cultures and languages in Australia compared to Italy. Australia's level of education is increasing. A larger group of students, 70 per cent, now go on to university. More than 42 per cent of the workforce is female which leads to an increased role for women in the family's decision making. This is important to marketers for their promotional programs. Many aspects of cultures make for different business decisions.

It would be more difficult to run a business in Australia because of the many different religions and languages of a multicultural society.


Free research essays on topics related to: organized crime, roman catholic, environmental forces, goods and services, trade and investment

Research essay sample on Trade And Investment Goods And Services

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