FACTORS RESTRICTING INTERNATIONALIZATION OF BUSINESS

FACTORS RESTRICTING INTERNATIONALIZATION OF BUSINESS 1.Sovereign political entities Every country has a sovereign political entity. There are more restrictions imposed on them for importing and exporting the goods and services in order to safeguard their national interest. The traders in international marketing have to observe such restrictions. These restrictions include the following.  Imposition of Tariffs and Customs Duties These are levied both on import and export of goods and services in order to make them costly in the importing country and not to ban their entry in to the country completely.  Restrictions on quantities Quantity restrictions are imposed in order to restrict trade in some specific commodities. The main purpose of this restriction is the protection of home country from the competition of the foreign commodities.  Exchange control The government may not ban the entry of goods in the country, but the importer is not allowed to get the necessary foreign exchange to make the payment for the goods imported. 2.Legal system  The presence of various legal system makes the task of business more difficult. 3.Monetary systems  Every country follows a monetary system. Some countries operate multiple rates in which different rates are applicable to different transactions. 4.Mobility of factors of production  The movement of various factors of production is less between nations than in the country itself. 5.Market considerations  The demand pattern ,channels of distribution, methods of promotion etc are different from market to market 6.Procedures and Documentation  Generally, the different laws of the country and the customs of trade in each country demand different procedures and documentary requirements for the import and export of the goods and services.