How do political and legal realities impact international trade, and what do businesses need to think about as they develop their global strategy? the WTO, have reduced tariffs and various non-tariff barriers to trade, enabling more countries to exploit their comparative advantage. Social factors – These factors are related to changes in social structures. For global traders, digital trade enables the coordination of international production processes through global value chains. The world's political relations, the policy of a country also has a big impact to international trade. a. The lower … As a follow up to the 2019 report by The Economist Intelligence Unit, sponsored by Basware, this new study dives into the key factors driving modern commerce, business transactions and supply chains over the next year. Understanding of these factors is important while developing a business strategy. 1) Impact of Inflation: ADVERTISEMENTS: If a country’s inflation rate increases relative to the countries with which it trades, its current account will be […] The costs of ocean shipping have come down, due to containerisation, bulk shipping, and other efficiencies. Trade between nations is an essential part of the global economy. Global factors influencing business are legal, political, social, technological and economic. International trade has consequently been facilitated by a set of factors linked with growing levels of economic integration, the outcome of processes such as the European Union or the North American Free Trade Agreement. International trade occurs when one country trades with another. Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.90-91. A variety of factors have contributed to the process of globalisation. ADVERTISEMENTS: Most influential factors affecting Foreign Trade are as follows: Because international trade can significantly affect a country’s economy, it is important to identify and monitor the factors that influence it. Related posts: Global Benefits of Trade; Pros and Cons of Foreign Direct Investments Governments have long intervened in international trade through a variety of mechanisms. Businesses are affected by an external environment as much as they are affected by the competitors. Certain raw materials can only be produced in certain parts of the world; many countries must trade for materials they are unable to produce themselves, and many choose to trade for goods that can be produced more efficiently elsewhere. Some of the most important globalisation drivers are outlined below. The term "global marketplace" refers to the international production and exchange of goods, services and money. 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