Barriers To The International Business Environment

Rising concerns on the economics in today’s era of globalization has definitely left a huge impact on the international business organizations. Many of the organizations try to adapt to with the unpredictable economic changes by applying the external environments methods. This is to increase the consumer confidence as well as increasing the profits of their organizations. External environment refers to the environment that has indirect influence on the business. Some external elements can harm the organizations if it is misused therefore it has to be monitored at all times. The international business environment can be defined as the environment in different sovereign countries, with factors exogenous to the home environment of the organization,

The only thing that they can do is by taking precautionary steps to prevent any further damages. One of the barriers to International trade that are likely to be applied will be Tariffs. Tariffs are mostly used as a barrier to free trade. It is basically a tax placed by the government on imports (Pettinger) In Malaysia, tariffs are widely used to regulate the importation of goods and Malaysia is known to have the highest tax placed on imported cars in the world. The main reason why Malaysia imposed tariffs on imported cars is to promote Proton to the locals, as this will increase the sales of the local cars thus gross domestic product of the economy will be higher. At the same time, the government wants to lower the unemployment rate by employing locals to work with the local companies like Proton and Perdue and this would also decrease the demand of imported cars because of the price differentials that makes it unaffordable for the Malaysian buyers. Besides that, unlike quotas, the government collects revenues from tariffs and the local producers on imported cars would also gain the benefits of selling imported cars because the price is higher and this satisfy the meaning of protectionism, “Aim is to cushion domestic businesses and industries from overseas competition” (Riley, 2012). When the

Quota can be defined as a restriction placed on the amount of a particular good that can be imported (Radcliffe, 2014). Quotas and tariffs have the same effects; quotas focuses more on restricting the amount of imported goods as for tariffs, it restricts the imported goods from coming in and impose tax on it which leads to increase in price and thus decrease in demand. In United Kingdom, the government has raised their import quota for Japanese cars by 20% and this has been very good for United Kingdom as most of the Japanese cars like Toyota, Nissan and Honda started to build their cars in UK which decreases the price of those Japanese cars sold in United Kingdom thus increase in sales. Based on This Independent news, this will also give benefits to other competitors in Japan like Mazda, Mitsubishi and Daihatsu that lack EC assembly plants. By imposing import quotas on the Japanese producers, this has restricted competition and gave the Japanese less incentive to cut price or import cheaper models. (Harrison, 1993). Import Quotas exists mostly due to protect the Infant Industry (Encyclonomic, 2000-2014) Infant industries are those newly opened companies that haven’t really established on anything yet. If the government doesn’t impose import quotas, the infant industries might get hurt because they are not able to compete with those big companies and this will therefore affect the government in long term. Import quotas