International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
services to the international business community. Thus, a firm which
enters Africa or the CIS countries has to necessarily depend on other
countries for banking services.
5. Purchasing Power
Another major determining factor for any international business unit
is whether the people can afford to buy for a product is low. In other
countries like Saudi Arabia, both the income and willingness to pay
for the product are high. In the Scandinavian countries the per capita
income is very high and they are ready to pay a premium price for
highly sophisticated items. However, the low population is a limiting
factor.
6. Foreign Exchange
Another determining factor in international business is whether
tforeign exchange facilities are available transactions. Although more
than 70% of the countries in the world do not have foreign exchange
reserves, the majority of them are becoming liberal in transacting
foreign exchange as a long term strategy for their future economic
development. Against this, some countries with surplus foreign
exchange reserves do not permit free movement of the currencies.
Such countries that have restrictions in repatriation of foreign
exchange will not be attractive to international business firms.
Therefore, countries with sufficient foreign exchange reserves, a
liberal policy on repatriation and which have a demand for the
products and services are an ideal destination for any company to do
international business.
7. Income Levels
Economies are classified into low income and high income
economies. Industrialized nations are high income economies and
enjoy a high per capita income. Companies manufacturing or
marketing premium quality or high technology products have an easy
entry into such advanced countries with the proper strategies.
Developing countries, which are the low income economies, are price
sensitive. Many of them are under pressure from high population,
unemployment and lack the vision to industrialize fast. Still they need
only primary goods and rated one amongst less developed countries.
Differences in the income levels may limit the involvement and
investments. Sometimes, in a densely populated country, a small
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