International Relations Effect On Business

Date: November 2, 2016

International relations affect everyday life, even though you might not realise it – even things such as the mortgage on your home is affected by the international climate. So, it is no wonder that these tethers between countries also have an incredible effect on the businesses that work to thrive in them. For many people, the exact effects are unknown; movements in the chessboard of business.

However, it is possible to see how these cross-continental ties affect trade and business.

Trade Abroad

One of the more obvious effects that international relations have on business is how you can trade abroad. All countries depend on trading abroad to survive; this has been the case for centuries and so trade is an important factor in most international relations. No one wants to bite the hand that feeds them, after all.

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The country you are in will always act to protect its own interest. Of course, you hope that this is also in the best interest of your company. The focus is often on cutting the cost of import and export tariffs – a costly aspect of trading abroad – and actively investing in international trade. If a dispute arises between countries, this may cause agreements to be suspended, or an embargo to be placed, meaning you cannot trade with that country at all.

Trade is often a bargaining tool on many other types of international agreements, such as battling climate change, human rights, and armed conflicts.

Overall, trading abroad should be bolstered by international relations as the government works to support the interests of their national businesses.

Business Markets

It is important to note that an area most susceptible to change because of both national politics and international relations is the business market. This is the heart of business, as it is where companies trade raw materials, resources, and components. The effect may be a result of political policies being put into place or the anticipation of future policies that may affect the market significantly.

Any policy change can have a direct cost on the price of materials, for example, and so the market may see significant increases or decreases in pricing. There may also be sudden rushes of trade to take advantage or to avoid these changes. International relations changes can have a major impact on the market.

The firm handshake between two colleagues in office.

For example, uncertainty preceded and followed the Brexit vote on an international level. However, the market (as well as the pound) has since recovered from this initial political decision. So, though fluctuation does occur, more often than not it returns to stability quickly.

So, as a whole, international relations are more often a bolstering set of policies for your business. Being able to see how they impact your trading abilities and the market is just an advantageous way to know how this might be.

Here at Dean Group we are dedicated to global connectivity and helping our industry to thrive. If you would like to know more, then please don’t hesitate to contact us. Just give us a call on 0161 775 1633 and we will be more than happy to help with your enquiry.

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