International business question?

Question

Although forces in the foreign environment are the same as those in the domestic environment, they operate differently. Why is this so?
Additionally, address why you think it is important to be aware of these forces.

Answer 1

They operate the same yet as you pointed out slightly altered also. The reason is look at yesterday & the stock market. The world ecomonies seperately work differently depending on the country & some allow investment some allow foreign investors some relie heavily on foreign investment which is greatly affected by the local economy obviously but as well as the local & world economy as a whole & from their aspect. Take Iraq their income is based mostly on oil Saudi Arabia is the same thing. So when the oil dries up or is bomded their income is affected & their outcome is which raises oil prices. Now Kuwait & Dubai also are highly vested in their own oil deposits but have started over the last few years expanding outside of that into other areas to help offset the affect oil & so that when their oil dries they can still go on as normal. Dubai & Kuwait have started investing within their own countries as well as on the world markets while opening up their country to foreign investments & partnerships so that people will come & as a result of all that they are increasing their tourist popularity with hotel resorts & other things. Dubai just built a home make snow maker & ski slope in the desert go figure. They also are building the worlds tallest building, big malls, & making their own private islands to encourage rich & famous to buy there & as a result the islands are in the shapes of the world or palm trees & stuff because again if You see Brad & Angelina Skiing in Dubai they know others will also. Dubai is now one of the biggest Financial Markets in the region & for a while was having to crack down on money laundering scams just like you still hear about in Switzerland & stuff. My point is that each economony is technically different & as you said the fundenmentials & goals are the same but they are still tied directly or indirectly to each other & the whole as a hole which is why things can be so affected. Take China a closed country for the most point yet when people paniced there it set off a panic in other economies because of two things. One some foreign countries & companies had been trying to open China & invest there & as a result people in those companies paniced wondering if it was still a good idea to invest there & other companies looking to invest there started to wonder & even pull their money out. There's a saying that before holidays like Christmas & New years they do either well or badly because during that time of year people are looking for the holidays & taxes so as Eddie Murphy said in a movie if one person panics it can easily set off a chain reaction within that company, market, & even the world because people start to wonder & want to get their money out so they can still get their kid a GI Joe guy with Kunfu Grip & buy their wife that necklace that matches her new dress & stuff.

Its good because of diversity but at the same time the same reasons its good can be what makes it bad when things go bad. All good things must come to an end at times so periodic bumps be it finanical markets locally or worldly are necassily to keep things in check. Take the house market. Do you think it makes sense to pay $650000 for a 60 year old house that has no lawn & needs work? Probably not but where I live thats what you get for $650k not much. If you go to Texas though you can get a brand new "mansion" looking house on several acres for the same if not less. The reason foreign environments are the same is because the idea & desire is the same regardless of the country or what holds the economony up just like on a domestic level the idea is the same to make money to support families & developement within the country. Heavy reliance in one area or market locally or on a world scale is not good because again one the systems need corrections as they do from time to time you get hit that much harder when it does because you arent prepared or spread out over several areas or markets within a local area but also on a world market in the hopes that if one area or market takes a hit some of or all the others might still go or improve offsetting any lost in the negative side. HP for example is known for computers & printers but as you know a few years ago computers didnt to so well but the printers & other lesser known areas of HP helped the company over come the fall of computers profits. Sorry if I got a little long or jumped around but your question was a interesting one that got my brain thinking :).