International Trade Patterns - Paper Example

The world trade patterns have been changing each and every time due to measures been taken by countries. The global growth has led to amending the structures of the global economy. This has mostly been influenced by the increase in the regional trade blocs. Most countries are forming trade bloc to reduce the cost incurred in importation and exportation of goods. However, other companies are imposing a restriction to make the business complicated hence been difficult for some countries.

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Free trade

Australia engaging in the formation of trade blocs such as free trade by removal of all the tariffs and barriers between the member countries has been beneficial. These have great significant more so to the Australian industries such as Choco bite industry. The removal of trade barriers has enabled the company quickly open new outlets in Italy. These will allow the company to enjoy the Italian significant innovation and manufacturing capabilities which will help the business to adopt new technologies and ideas to transform the company to a high level where it can compete with other firms effectively. Through free trade in Italy, the Choco Company will experience many benefits that will increase the profit margin of the enterprise.

As Italy host, many trade exhibitions through using their high rate household wealth will familiarize the company to many countries, which will increase the sales hence enhance the profit of the enterprise. The trade policies and agreement between Italy and Australia where all trade restriction are eliminated create a conducive environment for Choco bite industry to thrive. Choco bite industry entering into the Italy will enjoy many privileges. Firstly, Italy has a modern infrastructure that will enable easy accessibility of the chocolates to the market within the required period. However, the company will penetrate to Middle East markets and Mediterranean as the Italy is one of the precious gateways to such markets. Italy has been one of the top tourist attraction will boost the company output to sell to the tourist who visits the country. The company will also enjoy lesser flights cost for exporting their produce to the UK where this will reduce the cost of trading. The company can spread the risks into a wider market.

Economic factors

The economic factors comprise of the interest rates, economic growth and the rate of inflation. These affects how the company will offer and present the products to the customers. The pricing of the product will depend on where you give a competitive price to the local markets available. The current exchange rates, shipping, and tariffs will determine the cost of the product. If these economic factors are high leading to high prices, the company may not succeed in Italy, as many consumers will prefer to use the locally produced products. These will affect the surviving of the business.

Carrying production locally in Italy would be more productive as this will cut the cost that may be incurred in transportation as well as the duties. The company can also take advantage of the technology that will reduce the cost of labor, as few workers will be needed. Economic factors also affect the channel that will be used to market the products. The economic factor of Italy favors the Choco bite since the company has similar economic structures such as in Australia.

Involvement of businesses in Italy such as Choco bite will create a competitive economy where all sectors start forcing on producing high-quality products. These will benefit the consumers, as they will be able to get goods that are of high quality. However, there will be the elimination of monopolies where the consumers will be able to acquire goods at cheaper rates. Development of human resources in Italy will be seen, as foreign corporations such as the Australian Choco bite company will train local personnel so that they can be productive to their country. Furthermore, the government of Italy will be able to increase their revenue through taxes imposed on companies in the country hence raising the quality of services they offer to the local people of Italy.

Political factors

The policies implemented by the government may favor or influence companies from investing in Italy. These includes the tax policies, environmental laws, tariffs, trade restrictions and the political stability. Choco bite enjoys low taxes from Italy, which favors its growth in the country. The Italian government has set favorable environmental laws that enable companies to works effectively as well as taking care of the environment. The country has enjoyed political neutrality that gives confidence to Choco bite to invest in the country knowing their business is protected. The removal barrier to enter the market gives the company freedom to come and interact freely with the customers.

Social factors

The lifestyle of Italian people who are high consumers of chocolates provides the Choco bite industry to get a ready market for their goods this is due to good age distribution and population growth rate. As the country enjoys high tourist throughout the year makes the Choco Bite products to move at a higher rate as a tourist would buy chocolates as a form enjoyment. The introduction of such company brings the creation of employment to the Italian people both directly and indirectly. These changes the way of the living of the citizens. Through e-commerce, the company can reach many individuals in the countries creating a close relationship with the industry and the potential customers. Furthermore, it also creates flexibility in the sale of the goods to the consumers.

Cultural factors

The culture adopted by the company determines its success or failure in doing business. When a company has positive culture starting from the managers to the workers makes the business to increase its efficiency and competition in the market. Choco bite would work efficiently in Italy due to the labor attitude that favors the growth of the company.

Market needs

The market trends in Italy are increasing which increases the profit that will be earned by the Choco bite industry. The rising and falling off the market prices do not influence the progress of the company. The market has identified that it would be nice if the price would be lower to enable the people from the low-income earners to be able to afford the chocolates. The customers have urged the company to disclose the side effects of the products to make the consumers aware.

Political risk factors

Change of laws where it makes it difficult for different industries to conduct their business. However, the government may impose the restriction that will affect the Choco bite such as the issuance of permits and licensing. The increase in the cost of permits and licenses will scare away foreign companies. These are to make sure significant amount of the income that the company gets will remain in the country. The government may impose some fees to be able to retain the sales of the products in that country. Furthermore, the state may decide to favor home businesses by including discriminatory and investment restrictions.

Financial stability risk factor

Although political stability has been improving in economies, companies still find risks due to their progress. Availability of feeble systematic market liquidity that affect the international growth firms.

Corruption risk factors

Crime risk management may be the great disaster to manage in Italy. During the process of obtaining permits and licenses, land acquisition, public procurement and setting up the plant and its operation. Some people may take the advantage to exploit the foreign company making its profit to decrease. These would affect the stability of the business like the Choco bite making it unable to compete effectively.

Legal and regulatory requirement risk factors

The change of laws and regulations will influence the way the foreign companies will conduct their business. When the government of Italy makes variations in some laws may increase the cost that the Choco bite industry operate in Italy. These will discourage the Choco bite improve its competitiveness with the local companies hence may lead to its closure.

Trade barriers

Availability of trade barriers such as quotas would create a shortage or prevent the supply of goods from the producer to the consumer. If the Italy government impose quotas making it difficult for companies such as Choco bite to enter the Italian market, will lead to the rise of monopolies which in return affects the consumers as the available company may decide to raise the prices or produce inferior quality products due to lack of competition. Furthermore, the economy of Italy would decrease due to the decline in the taxes that the government gets from the foreign investors.

Impacts of E-commerce and international business

Use of e-commerce has significantly benefited the Choco bite industry in Italy as the company can easily market their products without moving to the parts of Italy to persuade the customers to buy the products. These cut the cost that would have been incurred in transportation as well as hire the sales person. E-commerce enables the company to reach all the parts of the country and even to the other nations. However, it is easy to build the customers trust and good relationship online. Despite its advantage, it has its loopholes. Online transactions may affect the security of the consumer. There is no guarantee that the person the buyer is making the payment to is the right owner or seller of the product. Choco bite may find price war online unlike when they were selling in the shop. This competition would lead to decrease in the profit. Online marketing also increases the number of returns and complaints as the consumer may decide that the product is not of the quality needed. Moreover, despite all these adverse effects associated with E-commerce the overall impact to the company is positive as it leads to increase in profit in return.