Demographics is a factor to considerwhilst conducting international business. The “study of human population interms of size, density, location, age, gender, race, occupation and otherstatistics” (P. Neelankavil, 2015). As the world population is rapidly on anincrease (6 billion people on earth) this will have an effect on internationalbusiness because some areas are more congested. Depending on the size andpopulation of the country will determine whether a business will want to investinto a foreign market as they will want to view how economically active thecountry is.
For instance, “1 billion inhabitants in China to less than 1million in Luxembourg” (P. Neelankavil, 2015). This indicates that there are more business opportunities available inChina due to the fact that there is a wider target market and people are moreeconomically active, implying more people are ready to work and spend theirdisposable income. National laws affect how businessescarry out their day-to-day activities and this could have an effect on theorganisations overall performance. Legal factors are vital for an organisation thatwants to establish longevity, especially for countries that want to expandglobally. Therefore, businesses have to consider legal acts such as health andsafety, equal pay, child labor etc. The government can put in legislations inplace, for instance to pay men and women the same amount per hour of work.
Also, there are specific laws that cater tointernational businesses, for instance “investment of capital and repatriationof earning” (P. Neelankavil, 2015). Additionally, different countries have different forms of law, UnitedKingdom follows a common law, France follows civil law and theoretic law forcountries that follow a religion such as Saudi Arabia.
The importance ofunderstanding the difference between country law is crucial for a business’strying to expand internationally as they would have to abide by laws of thecountry they’re in. For instance, in Saudi Arabia, women have to keep theirmodesty in public and cover themselves head to toe, whereas in France, it isbanned to wear a hijab in public. A crucial aspect that countries mustevaluate before doing business internationally is the condition of the market.Certain markets have no space for new businesses to co-exist as there arepresently too occupied, therefore no opportunities for new businesses toflourish.
Kokemuller, 2007 explains the limitations that may occur fromentering a business that is too saturated. The issues are that it may restrictthe profitability of the business, as there are too many businesses operatingin the current market and therefore there may be a little customer left, whichmay construct the businesses aim of profitability. Additionally, another issueis the potential to grow within a market. If a market is already overlysaturated, there will be no space for new business to flourish and grow. To conclude,international businesses brings risks such as language barriers, exchange ratesand legal requirements, however, it creates opportunities like integration ofeconomies, increase profitability and brand notoriety.