able to diversify their risks across several nations, decreasing substantial hazards to the
corporation.
M2:
Analyse the barriers of operating internationally for two contrasting
businesses
Barriers to International Business:
Businesses that want to internationally trade are impacted by the barriers that incorporate
within them. These restrictions, or barriers, sometimes operate within the trading bloc areas
where negotiations are underway, or operate to stop businesses trading in a particular area.
This type of restriction in international markets is known as protectionism. There are numerous
different reasons why countries may wish to restrict or block others from entering and trading
in their country. These include protecting infant industries, protecting jobs in the country,
protecting local businesses in that country, differences in consumer laws and cultural
reasoning. Protectionism is used as barriers to trade, to protect other businesses from the
international market to trade within their borders/country. The way protectionism works is
where governments' policies are implemented, where they tend to place new rules and
regulations for the international trade market that restrict international trade to help domestic
industries. Countries do this because they want to contribute to their overall Gross domestic
product, as this is the measure of the size, market value of all goods produced by the country to
determine the health of the country's economy over a period of time. They prominently want
to focus on imports, as imports increase consumer choice, and help keep prices low, raising the
purchasing power for consumers.
Protectionism:
Protectionism arises when nations impose import restrictions while encouraging exports into
the economy. This can include increased tariffs (a sort of import tax) as well as quotas and
embargoes. Other kinds of protectionism, such as domestic subsidies that provide sectors
unfair advantages, might be less evident. Protectionism has the primary impact of reducing
commerce, restricting foreign products and services in the marketplace, raising prices for
specific commodities, and providing a type of subsidy to protected sectors. There are several
reasons why a government may seek to prohibit others from trading in their territory. These
include safeguarding emerging sectors, safeguarding domestic employment, safeguarding local
enterprises, variances in consumer legislation, and cultural considerations. For example, if a
domestic manufacturer produced items that were more expensive than international imports,
the government may impose tariffs, or import duties, on the foreign-made goods. The
, consequence would be to increase the price competitiveness of US-made items. Protectionist
policies are often used in an economy to stimulate domestic investment in a certain industry.
Advantages of Protectionism:
➔ More possibilities for growth: Protectionism gives
opportunity for local industries to flourish until
they can compete in the worldwide market against
more experienced enterprises.
➔ Imports are reduced as a result of protectionist
policies, allowing the country to improve its trade
balance.
➔ More work: When domestic enterprises increase
their workforce, employment rates rise.
➔ Higher GDP: Protectionist policies tend to raise GDP by increasing domestic output.
Protectionism's Drawbacks
➔ Technological stagnation: Because local producers do not face overseas competition,
they have little motivation to innovate or invest in research and development (R&D) of
new goods.
➔ Consumers have fewer options in the market as a result of restrictions on imported
items.
➔ Price increases (due to a lack of competition): Customers will have to pay more without
noticing any major improvement in the goods.
➔ Economic isolation is frequently followed by political and cultural isolation, which leads
to even more economic isolation.
In the following section I will discussing the reasons behind protectionism:
Protect infant industries:
Infant industries are new industries in a country that are developing or in the early phases of
growth. Infant industries lack the experience and size to compete effectively on a global scale
with mature competitors. An infant industry is distinguished by a lack of efficiency and
competitiveness, as well as a high sensitivity to market shifts. Nations may choose not to allow
competing enterprises from other countries (international rivals) to trade with them in order to
