Barriers to International Business
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Firms desiring to enter international business face several obstacles; some are much more severe than others. The most common barriers to effective business are cultural, social, and political barriers, and tariffs and trade restrictions.
The first one to effective business is the cultural and social barriers. A nation’s culture and social forces can restrict international business activities. Culture consists of a country’s general concepts and values and tangible items such as food, clothing, and building. Social forces include family, education, religion and customs. Selling products from one country to another is sometimes difficult when the cultures of the two countries differ significantly. For example, when McDonald’s opened its first restaurant in Rome, it was met with protest. The people of Rome objected to the smell of hamburgers frying. McDonald’s overcame this objection by changing the exhaust system of the restaurant.
The second barrier is the social forces that can create obstacles to international trade. In some countries, purchasing items as basic as food and clothing can be influenced by religion. In many nations, individuals do not have the same choices in food, clothing, and health care.
The third one is political barriers. The political climate of a country can have a major impact on international business. Nations experiencing intense political unrest may change their attitude toward foreign firms at any time; this instability creates an unfavorable atmosphere for international trade.
The last one is the tariffs and trade restrictions. Tariffs and trade restrictions are also barriers to international business. A nation can restrict trade through import tariffs, quotas and embargoes, and exchanges controls.