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Protectionism In International Business

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Protectionism refers to the policy of a country practiced on other countries, in which certain trade barriers are imposed for economic or non-economic reasons. The purpose for protectionism is to protect home economy and jobs, such as infant industries and domestic employment (Mortimer, 2013). Protectionism is used to protect against unfair trade practices, and correct an adverse balance of payment. Protectionism is also a source of revenue for government. There are several forms of protectionism, such as tariff, quotas, embargos, import license, exchange control, and industrial subsidies. The advantage of protectionism is ensuring the flowing of domestic economy. The domestic businesses have less competition, when there is a decrease in import…show more content…
A business can set up a store in the emerging markets. For example, M&S has the opportunity to expand and set up a store in the emerging markets. M&S can become the recognized brand in the emerging markets, when M&S able to carry out business successfully, as M&S is the first to offer consumers in the emerging markets something new. M&S can also build a strong relationship with local partnerships, and has an advantage over competitors that come along later (Kokemuller, n.d.). Thus, the opportunity of first mover advantage can be provided when doing business in emerging markets. Besides, the advantage of emerging markets is gaining prestige. Emerging markets provide a chance for M&S to enter a new market, by taking the existing brands, goods and services, to reach the international customers. M&S able to gain prestige, as well as increase the brand awareness, when the local customers recognized that M&S expands the business to emerging markets. M&S can also increase sales and revenue, as M&S has access to a new market, and sells goods and services to a bigger market. In addition, many customers are willing to purchase at M&S that has prestige, and other businesses are likely to partner with M&S that has expand business globally (Pendleton, n.d.). Thus, prestige can be gained when doing business in emerging markets. One of the advantage of emerging markets is establishing brand and…show more content…
Different countries will have different cultural perspectives, rituals and product usage. M&S may struggle with the understanding on how to operate a business in the emerging market, as M&S which origin from UK may not know the cultures of other countries, such as China. M&S will first need to understand the local cultural background of the countries, in order to sell the goods and services effectively (tutor2u, 2012). Thus, cultural differences will be faced when doing business in emerging markets. Furthermore, the disadvantage of emerging markets is the economic risk. M&S may suffer from insufficient labour and raw materials, high inflation or deflation, unregulated markets and unsound monetary policies, due to the low economic stability of emerging markets. In addition, M&S may face the difficulty to raise capital, due to the poorly developed banking system, and thus causes M&S unable to look for a proper financing that is required for the growth of the business (Ameriprise, n.d.). Thus, economic risk may be faced when doing business in emerging markets. One of the disadvantage of emerging markets is the political risk. Emerging markets may have unstable governments, as well as unstable legal and ethical legislations, that can be used to protect the business operates in the markets. Businesses, such as M&S, that operate in emerging markets, will then face the risk of criminals or business
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