A business expanding into a new country faces several potential threats. Here are three examples:

1. Political Instability: Political instability (e.g., coups, civil unrest, terrorism) can disrupt business operations, damage infrastructure, and create uncertainty.
Mitigation Strategy: Conduct thorough political risk assessments before entering the market. Obtain political risk insurance. Develop contingency plans for potential disruptions. Diversify operations across multiple countries to reduce reliance on a single unstable region.

2. Currency Fluctuations: Changes in exchange rates can impact profitability, making exports more expensive or reducing the value of foreign earnings.
Mitigation Strategy: Use hedging strategies (e.g., forward contracts) to fix exchange rates. Invoice in a stable currency. Structure pricing to account for currency fluctuations. Consider local sourcing to reduce reliance on imports.

3. Cultural Differences: Differences in language, customs, and values can lead to misunderstandings, marketing failures, and difficulties in managing employees.
Mitigation Strategy: Conduct thorough market research to understand the local culture. Adapt products and marketing campaigns to suit local preferences. Invest in cross-cultural training for employees. Employ local managers who understand the cultural nuances.

Positive Effects:

• Protection from Competition: Tariffs increase the price of imported goods, making them less competitive with domestically produced goods. This provides domestic businesses with a greater market share and protects them from foreign competition.
• Increased Domestic Sales: By making imports more expensive, tariffs encourage consumers to buy domestically produced alternatives. This leads to increased sales and profitability for domestic businesses.
• Government Revenue: The government collects revenue from the tariffs imposed on imported goods. This revenue can be used to fund public services.

Negative Effects:

• Higher Costs for Businesses: Businesses that rely on imported components or raw materials will face higher input costs due to the tariff. This can reduce their profitability and competitiveness.
• Reduced Consumer Choice: Tariffs can lead to a reduction in the availability of imported goods, limiting consumer choice.
• Retaliation from Other Countries: Imposing tariffs can provoke retaliatory tariffs from other countries, harming export-oriented businesses.
• Inefficiency: Tariffs can shield inefficient domestic businesses from competition, reducing the incentive to improve productivity and innovation.

In summary, while tariffs can benefit some domestic businesses by providing protection, they often come at a cost to other businesses and consumers. The overall effect is complex and depends on the specific industry and the broader economic context.

Improved transport links have been a crucial driver of globalisation because they reduce the cost and time associated with moving goods and people across international borders. Historically, high transportation costs limited trade to nearby regions. However, advancements like container ships, airplanes, and efficient road and rail networks have dramatically changed this.

Examples include:

• Containerisation: Standardised containers allow goods to be easily transferred between ships, trains, and trucks, reducing handling time and costs. This has facilitated the growth of just-in-time inventory systems.
• Air freight: Essential for time-sensitive goods like electronics and pharmaceuticals, air freight enables faster delivery and access to global markets.
• Improved road and rail networks: These networks facilitate the movement of goods within countries and to neighbouring nations, supporting regional and international trade.
• Reduced shipping costs: Economies of scale in shipping have led to significantly lower per-unit costs, making international trade more profitable.

Without these improvements, globalisation would be far less extensive. The ability to efficiently move goods has fostered international supply chains, increased competition, and facilitated the growth of multinational corporations.