Impact of financial change on international business


Last four years experienced seen an instant, radical change in an international economical condition. The Global Economic change embodies the upgrading and degrading of any country's living standard. Global financial changes have an effect on the economical environment which includes level of job, inflation, interest, taxation and exchange rate. Hence, implementation of economic plans has a strong direct influence on international business and that's way when the International monetary regulations are framed these are framed with regards to international business. Internationally there are amount of problems which had damaged the international economy as well as nationwide market such as problem in international trade, diseases like bird flu, environmental condition such as disasters like tsunami in Japan, financial meltdown etc. and therefore globally coordinated efforts are required like international general public goods whose guidelines applies across the globe as a whole M. , Ferroni and A. , Mody, (2002).

Defining global economy

The term global or international economy refers to the put together world economy with a free of charge and open deal of labour, technology, goods and services; it is a picture of your interconnected international market with an increased movement of capital. This concept could not be grasped in isolation but parallel to globalization which can be an integration of usage and production atlanta divorce attorneys market across the world. It is a view that globalization not only benefits the united states internationally but also do the betterment for your global market. Today the international market is recognized as an current economic climate with the or combined market for all goods and services produced EconomyWatch. com.

Global market at a glance

In 2010, the entire world economy in term of GDP was worthy of $74. 007 trillion (PPP method) and likely to expand $78. 092 trillion in 2011. Financial condition with in BRIC (Brazil, Russia, India and China) have submitted 7 to 10 expansion rate. These conditions of BRIC countries enjoyed a huge role to make the monetary atmosphere for less wealthy nations just as many situations under developed and developing countries depend on economical wellbeing of developed countries M. , Lanzeni, (2008). The global economic condition is mostly dominated by technological aspect; particularly personal computers, telecommunications, robotics, medical equipment etc. although the huge improvement has occurred in developed countries but this accelerated development of agricultural and commercial technology both is creating an elaborate environmental problems. The development rate for commercial production is projected in 2003 at 3%.

Global economical change

Today the international system is under the huge structural change in term of both financial and political dimensions. The international economy has mixed its development and financial system to a fantastic degree, which challenges the nation's economic specialist and creates demand for global organizations Pollins, B. , (2007). The hasty financial development in various large emerging-market (LEMs) economies is in charge of such a radical change in the global market. Nevertheless the implications of the expansions for the management and performance of the global financial and economic system are controversial. On one side economical observers do forecast the move of economic electric power internationally and on other area, it is stated that US will stick it out to be the global superpower and will continue to dominate the international economic climate and economy. Matching to G. , Sachs, (2007) the primary perpetrators for such a huge monetary change in the entire world are BRIC (Brazil, Russia, India and China) countries which is advisable to recognize and change to these emerging global economy and financial changes.

Reasons for global economic change

Across the world today economies are going through an enormous economic modification process. The top economists has explained this process by many different terms such as globalization, industrialization, structural modification, and some time even just economical change. Generally these changes appear due to the decrement of administration participation or from demand to capitalist economies. It can be said that there are three coinciding mechanisms accountable for the world-wide economic change or adjustment process.

Shift of Control to capitalism economic environment.

Command economy is the monetary system where price, resource and distribution are under administration regulation in support of government have an authority to decide about which good and services need to be produced and in what variety it is also referred to as centrally planned overall economy Ericson, R. , E. , (2005). On the other hand in capitalism type of economic system the capital is held by the private owners and federal government role is very limited in this Swedberg, R. , (2011). In true to life case pure command line and real capitalism economy does not exist but a blended economic system containing top features of both capitalism and command line economy is followed although economies can vary greatly between control and capitalism economy. Today because of the globalisation the combined economical system became imbalanced and tilted towards capitalism system of economy.


The collection of policies made to reduce the role of government and boost the role of private industries.

Source: http://www. harpercollege. edu/mhealy/eco212i/lectures/command/command. htm

There are certain regulations implemented such as privatization in which government assets are sold to private owners, promoting competitions among private owners, leaving not a lot of role in government's hand, reformation of price globalization of the market, lowering the government budget and do less administration spending which reduce inflation and promote private investment.



Competition limited role of government

Price reformation promoting private investment

Source: author's creation


There are some benefits and problems involved in the economy shift from command overall economy to the capitalism market. Such as for example market based overall economy that is capitalism current economic climate is actually achieves more efficiency in comparison to command economy and incredibly less resources are misused but in negative sense primarily there's a amount of inflation, unequal economic circulation of income and unemployment Dave, S. , (2007).

Free trade

Economists favour free trade and recently US congress and US leader have backed the view for taking away of trade barriers. It isn't wrong to say that across the globe countries are lessening there trade barriers. And several have even authorized multilateral and bilateral agreements with other countries in neighbour or region.

Benefits and problems of free trade

As the income level of men and women continue increasing their living standard also improves and then for that they need and buy more luxury goods. Therefore countries producing luxury goods get richer as the demand for their produced increase overtime. People also get subjected to more variety of goods and services which is the biggest benefit for the free trade.

Free trade is the biggest means of competition and competition can be filled with risk and especially in the problem countries wealth. Company also try hard to protect them self against free trade. And for the reason that situation international goods can become more expensive as more tax is imposed. In addition, it dangerous for the local producers as they need to face multinational business organizations and which finally pushes these to exploit the locals Pettinger, T. , (2007).

Economic Development

But after all of the reasons the biggest reason for the financial change is the entire world's economical development. It is hard to explain this concept but increase in GDP per capita is used as the solution by the economists.

There were two main principles taken as the reason why for financial development they are


It is the trade policy of the market with the purpose of speeding the industrialization process in the country by using exporting goods that the nation acquired received the competitive edge. This opens domestic market to other foreign marketplaces some polices followed under this are floating exchange rate, reduced traffic obstacles and government supports. Certain countries like South Korea followed it a whole lot Export-Oriented Industrialisation.


It is an important monetary development program in which there's a dependence on import in some nations for development of local business within the country. This theory has been plasticized throughout 20th century by the developing nations by import substitution industrialization employment opportunities is increased for individuals, advancement increased in the countries, decrease in dependency on overseas countries and methods used against this change is import quota and protecting tariffs Jim, B. , (2003).

Impact of Economic change on international companies

International companies are the most important factor which burning the globalization. So that it influences the most to the overall economy and became the biggest part because of its change. International companies do their procedure at the mix point of foreign investment and international trade. They are also known as Multinational Company it is the fact type of organization which organize and control production in at least two countries Caves, R. , E. , (1996).

There is a huge investment in recent years which possessed boomed the property and stock market and became an enormous push for steady growth of European countries and North America but beside these, purchases have also brought a great monetary development in Midsection East, Africa and Japan.

Impact of economical change on SABIC and how management cop up through the situation

The SABIC likes goodwill as it includes a strong brand image among Petrochemicals Company in the Gulf region. It includes seen a huge profit in previous two years and because of the back-up by Saudi Authorities SABIC enjoys exceptional credibility and influence. The business have an enormous size and incorporation rendering it reaps good economies of range. However, some countries like China and Iran are involved in aggressive petrochemical creation, which may jiggle the rates plan in future.

Source: SABIC annual report 2009

The season 2009 was one of toughest concern for the SABIC but all the issues were well been able. Going against the environment of global financial disorder, SABIC turned up to a very praiseworthy performance with the increase in production by 4 % and upsurge in sales by 5 %. Although there is reduction in the profits due to the jiggling of the purchase price brought on by world's monetary slump but remarking the entire condition of the company the performance was strong over summer and winter and it also proved the capacity to perform well out of pressure. That is all possible because of unique and able board and members of the company as they given very powerful strategy on which company followed regularly in recent years. The management of the business had acquired to generate the ability and global presence, and working with desire to to be the global head in the field. Company and there management did the trick hard to improve their business process and invested an enormous capital in the introduction of plant and circulation facilities, to be able to successfully exploit the growing demand. Company possessed also invested on employees with a view of desire to their commitment and talent. The acquisition is definitely a key advantage for the company so it increases with the dependable rate toward the awaited bold 2020 strategy. Company also committed to technology with the view of providing clean, safer and lasting products to the world. The technology in the company looks beyond of just providing product but also looking ahead to interact with areas, stake holders and customers as well as relate themselves to the environment and various other honest issues. With all the new organization composition they are actually with the capacity of meet more of customer's necessity and with quite strong global buying ability, upgraded process and policies made it possible for the company to help expand combine the global functions SABIC gross annual record, (2009).

Conclusion and recommendations

It is important for any business organization to have a good and suitable management team to deal with all type of situations and make an effective plan for future risk and opportunities as well as for the business enlargement. The rough rise of the purchase price have been the major cause of sever inflation throughout the globe. The nation's inflation rate will vary but still developed and under developed countries both are facing economical fluctuations. Over the last few years the current economic climate shown huge variation in the global condition in japan is faced deflation Zimbabwe has faced hyperinflation. Where as many measures can be studied to get over these conditions at the micro level by the managers as well as on macro level by the modern culture of international organizations one of the cases is introduction of Euro as the normal currency in January at American European countries region. With a good prepared strategy and implemented properly managers may easily cop up with any sort of financial or financial problem

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