International Business: The Economic Factor's Role in Expansion

This essay delves into the critical role of economic factors within the context of international business, emphasizing their significance in strategic decision-making and global expansion. The analysis employs the PESTLE framework to assess the macro-environmental influences on business operations. The essay argues that economic factors, including financial stability and market conditions, are paramount for businesses venturing into international markets, often outweighing political and legislative considerations. The author supports this viewpoint with examples, such as the Australian economy, highlighting how a stable economic environment facilitates business success. Furthermore, the essay acknowledges the importance of adapting to changing economic landscapes, particularly in regions with fluctuating conditions, like Syria. Ultimately, the essay underscores the need for businesses to conduct thorough environmental analyses to formulate effective strategies for mitigating risks and capitalizing on opportunities in the international arena. The author concludes that economic factors are the most crucial consideration for companies expanding globally.

Running head: INTERNATIONAL BUSINESS
International Business
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Author’s Note:

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International business has emerged as the recent trend in the business world and it is
generally seen that most of the business organizations in the present times take the help of
this particular style of business “not only to reach out to a larger number of people but also to
bring about their overall growth as well as development” (Srdjevic, Bajcetic and Srdjevic
2012). This particular trend can be seen as a reflection of the changing nature of the
contemporary business world which in turn has been brought about by the “recent changes in
the fields of technology as well as innovations and also on the score of globalization”
(Zalengera et al. 2014). However, before the various business organizations can embark on
the process of internationalization there are certain factors which they need to take into
consideration (Sebestova and Nowáková 2013). The most important tool which is used by the
various business organizations to analyze the business environment in which are operational
is the tool of PESTLE analysis (Sebestova and Nowáková 2013). This essay will discuss
about this particular framework and will try to show that the economic factor is one of the
most important factors which affect the business of a particular business organization in an
international setting.
The PESTLE analysis is a framework which is being used by the various business
organizations in the present times to analyze the macro as well as the micro environment in
which they operate (Bartusková and Kresta 2015). This particular framework gives the
various business organizations an idea about the key competencies as well as the weaknesses
of the environmental conditions in which they are operational (Khan, Alam and Alam 2015).
Furthermore, this particular framework also provides an idea to the various business
organizations about the key opportunities as well as threats which galore their business
organizations. Therefore, it would be apt to say that the framework under consideration has
emerged as one of the most important ones in the recent times and helps the various business
organizations in a significant manner in the formulation as well as the implementation of new

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strategies with the view to mitigate the risks and the threats faced by them. Thus, this
particular framework becomes of paramount importance for the business organizations which
are following the various precepts of internationalization (Khan, Alam and Alam 2015).
In the opinion of many people not all the components of the framework under
consideration here are of equal importance (Utami and Lantu 2014). In the recent times it is
generally seen that the economic factor has gained much more prominence than the other
factors and it is a reflection of this particular factor that the various business organizations
which follow the policy of internalization take this particular factor into special consideration
(Butryn et al. 2015). It is significant to note that since the ancient times the economic factor
has played a significant role in the business world and therefore it is seen that a sound and
strong economic condition is one of the most basic requirements of the various business
organizations even in the present times. Money or monetary gains is one of the primary
reasons which not only influences the various business organizations but also motivates the
concerned business organization to perform in a much better manner. Thus, it is seen that the
various business organizations in the present before expanding their business in any other
foreign location one of the primary factors of consideration for the concerned business
organization is the economy of the nation under consideration and the net profit percentage
which the concerned business organization would be able to gain by expanding into that
particular nation. Furthermore, in the opinion of many experts the prospects of a particular
business organization is directly related to the economic factor or the economic condition in
which it is operational (Butryn et al. 2015). The “Global Strategic Rivalry Theory”
propounded by the famous economists “Paul Krugman and Kelvin Lancaster” also state
that the economic factor is one of the most important ones among the various factors which
affect the business process of a particular business organization (Belniak 2015). Furthermore,
the economists are also of the opinion that the factor of economic advantage is often utilized

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by the various business organizations as a means to gain competitive advantage over their
rivals operational in the same field of business. However, there are others who are opinion
that the political as well as the legislative factors are more important than the economic
factors (Aithal 2016). These scholars are of the opinion that a stable as well as sound political
climate is one of the prerequisite for the growth of the various business organizations (Aithal
2016). Furthermore, these scholars argue that even if a particular nation has sound economy
but does not have a stable political framework then a particular business organization will
find it very hard to sustain themselves in that particular nation (Aithal 2016). Therefore, it is a
reflection of this particular fact that the various business organizations find it very hard to
sustain themselves in the nations of the politically unstable nations like Syria, Pakistan and
others on the score of the unstable politically unstable condition over there inspite of the
economic prospects which these nations present to the various business organizations. In
addition to these there are others who are of the opinion that the legislative factors are of
paramount significance which the various business organizations need to take into
consideration for the purpose of their international business in the other nations of the world
(Halik 2012). These people are of the opinion that even if a nation is having a sound political
as well as economical framework yet the business of a particular business organization is
likely to get hampered if the legislations passed by the concerned nation are not congenial for
the business of the concerned business organization (Halik 2012). However, there are other
scholars who are of the opinion that the various economic factors are of supreme significant
for the business of a particular business organization especially when it is trying to expand
into the other nations of the world and all other factors are of secondary consideration for the
business organization under consideration (Ho 2014). These people support their opinion on
the basis of the fact that the political as well as the legislative factors related to a particular
nation keep on changing on a regular basis however the economic condition takes decades to

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change and therefore the primary consideration of the various business organizations during
the process of expansion into the other nations of the world should be on the economic factor
(Ho 2014).
The nation of Australia has one of the most stable economies frameworks of the world
and therefore it is generally seen that the various business organizations enjoy a very
congenial condition for the business of their business organizations (Paunescu 2013).
Furthermore, the nation of Australia by dint of belonging to the one of the first world
countries of the world has not only a stable economy but also has adequate tie up with the
various other nations of the world and also the World Bank. This particular feature is of
paramount importance for the various business organizations operational or trying to expand
in to the developing nations of the world. For example this will be one of the most important
factors for the business organizations trying to expand into the nation of Syria on the score of
the unstable economy which the nation has since the trouble started in the year 2011
(En.zamanalwsl.net. 2018). However, various critics are of the opinion that the economic
condition of the nation is likely to revive once the war gets over and this will act as a boon for
the business organization which are trying to expand into this particular nation
(Newsdeeply.com 2018). Furthermore, the increase in the prices of the barrels of oil which
forms one of the key raw materials for the various business organizations operational in the
nation of Australia also created a stir in the business world of the nation (The Sydney
Morning Herald. 2018). Thus, it would be apt to say that the economic factor in the recent
times has one of the major factors which affect the business of a particular business
organization.
To conclude, the business environment in which a particular business operates forms
one of the most important elements of the business of the concerned business organization.
Therefore, it becomes very important for the various business organizations to analyze the

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business environment in which they are operational. Furthermore, an analysis of these factors
not only provides relevant information to the various business organizations about the
conditions in which they are operational but also helps them to develop effective mitigation
strategies. In the present times it is seen that the economic factors have gained more
prominence than the other factors which affect the business process of a particular business
organization. It is a reflection of this particular fact that the primary consideration of the
various business organizations during the time of expansion into the other nations of the
world is on this particular factor.

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