BU7412 International Business Assignment Sample
1. Introduction
Internationalization is an important aspect of a business that helps businesses to expand their business process and operations beyond the domestic market by understanding the requirements of the consumers. This study is based on broadening business from Bangladesh to France, which is part of the European Union.
This study contains three different sections, which cover three different aspects based on the trading block. Section one of the study is going to highlight the political, social, economical and financial conditions of France, which is crucial for businesses. On the other hand, section two of the study is going to highlight the key challenges that France can face during trading with regional trading blocks.
Section three of the study is going to highlight the steps and measures that France has taken to mitigate the challenges that are mentioned in section three. Lastly, the study is going contains recommendations that can help France to mitigate the challenges faced due to the trading bloc.
2. Section 1
France is one of the most advanced countries in the world and is the 6th largest economy in the world. The strategic geographical location of the country is one of the best in the world in terms of transport infrastructure. As a result, France is considerd to be one of the most attractive countries in the world in terms of attracting foreign investors across the globe.
As per the view of Barner-Rasmussen and Langinier (2020), almost more than 28000 companies in France are part of foreign capital. The population of France is 6.76 crores as of 2022, which makes it ideal for international business to expand their business in the country. As per INSEE, the export of goods and services has increased by over 8% during 2021 compared to 2020.
On the other hand, the imports also increased by 6.5% during the same period. Thus, France is becoming one of the main hubs for international business to expand. The main trading partners of France are Germany and USA and the total value exported by the country during the financial year 2021-2022 is $488 billion and imported $582.6 billion. Thus, France is becoming one of the most attractive countries for foreign direct investment.
2.1 First Topic
France is becoming one of the leading importers and exporters of goods and services in the world after every year. The country is now night largest exporter and seventh largest importer (WTO.com, 2022). http://BU7412 International Business Assignment SampleThe trading activities of France represent more than 55% of the country’s GDP (Worldbank.com, 2022). http://BU7412 International Business Assignment Sample France is known for exporting several products such as aircraft, vehicles and pharmaceuticals across the globe and is one of the leading manufacturers of aircraft in the world.
On the other hand, the country is known for importing several products such as consumer goods and pharmaceutical products. According to Biard (2019), the main customers of the country are Germany, Belgium, Italy and the United States while Netherlands, Germany and Belgium are the main suppliers for the country. Due to the high trading activities conducted by France, the country is regarded to have an ideal business environment for international businesses to expand.
Figure 1: GDP of France according to financial year
(Source: Statista.com, 2022)
France is a member of the World Trading organisation and conducts all their trading operations through the organisation. With the help of WTO, France conducts their trading operations legally to avoid any conflicts with other countries across the globe.
As opined by Kang et al. (2021), the three different trade agreement that is followed by France is the Unilateral Trade agreement, the Bilateral Trade Agreement and Multilateral Trade Agreement. As a developed country, France utilised unilateral trade agreements during trade with small countries to help underdeveloped countries grow and develop.
On the other hand, a Bilateral trade agreement is utilised by France to conduct trading activities between both parties. France utilised bilateral trade agreements while trading products such as automotive and oil with other countries. The multilateral trade agreement is the most complicated agreement out of all the types of agreement and is rarely utilised by France.
However, the multilateral trade agreement is very powerful and can be conducted during times of crisis to provide a competitive advantage. Considering legal and regulatory perspectives, France is one of the best countries to conduct trading activities legally without any major conflicts at any point in time while conducting trading.
As a developed and powerful country, the corruption index of the country is low compared to other developed countries across the globe. The country scores 71 on the Corruption Perception index where 0 indicates a highly corrupted country and 100 indicates a highly clean country.
France is ranked 21st among 180 countries in the world in terms of the highly clean countries considering corruption. Due to the low corruption score, international business prefers France to expand their business within the country. Besides having a low corruption score, France is also politically and economically highly stable, which boosts the innovation of the country largely. As per the opinion of Sekacheva (2021), the country invests heavily in innovation to develop its efficiency in technological aspects.
2.2 Second Topic
France is one of the most politically stable countries that are ideal for international business to grow and develop. The economy of the country increased by 6.3% in 2021, even after having several negative impacts due to the Covid-19 pandemic in 2020. With a GDP of over $2.5 trillion, France is regarded as the fifth-largest economy in the world and the third largest within Europe.
According to Evenett (2019), the country has a strong manufacturing sector that is crucial for international businesses to get attracted. Due to having a strong manufacturing sector, the operational costs of a business can be reduced considerably to increase the profitability of the company. France also has an educated population with a talented workforce that can drive the productivity of international business largely.
Besides that, the country also has innovative business leaders that can provide the necessary guidance to the employees efficiently. Thus, international business can easily create a positive business environment that can increase the profitability of the company largely. One of the other positive aspects of France is that the country has an excellent infrastructure, which can provide immense benefits to foreign businesses.
Figure 2: Turnover of the manufacturing sector of France from 2009 to 2020
(Source: Statista.com, 2022)
The government of France also plays a huge role to develop the country into a business-friendly country for foreign businesses to expand. As per the opinion of Toumi et al. (2021), the government supports technology and innovation, which is why the government huge invest huge amount of money in developing a favourable foundation for innovation.
The main motive for investing in innovation and technology is to attract foreign businesses to expand their business within the country. France is also regarded as an industrial powerhouse, which is considered the country’s largest economic sector. This is the reason behind the country being the leading manufacturer of aircraft across the world.
As a result of several benefits, foreign businesses might get to expand their business in France, however, France poses some serious challenges or issues as well the foreign businesses. Opening a business in France can be a very lengthy process, especially for businesses in non-European countries.
Furthermore, the employment costs within the country can run high because of the payroll taxes that businesses have to pay to the government of the country. The language barrier is one of the issues that foreign businesses can face even though English is regarded as their main language (Goutte et al. 2020).http://BU7412 International Business Assignment Sample Foreign businesses are required to have knowledge of French to communicate with local distributors and suppliers to conduct business operations.
2.3 Conclusion
Considering all the facts and statistical data mentioned in the section, France can be considerd as an ideal country for foreign business to expand their business. The country is very active in trading activities with other powerful countries of the world, which can be crucial for the growth and development of foreign business.
From the section, it is evident that France has a politically stable environment that can be crucial for foreign business to get their desired profits from the country. Thus, France is regarded as an ideal country for foreign businesses to expand their business operations and get their desired profitability.
3. Section 2
The North American Free Trade Agreement is of the regional bloc that France is not part of. This trade bloc was introduced in 1994 to conduct trading operations between three countries such as the USA, Mexico and Canada. Even though France is one of the main importers and exporters of goods and services, the country is not part of the regional blocs.
As stated by Aghion et al. (2020), the main reason behind the development of NAFTA was to eliminate tariffs between the three countries during importing and exporting of products. With the help of NAFTA, countries can conduct trading activities by ensuring workplace safety and environmental protection. thus, NAFTA is developed for countries of North America only and not for other European and Asian countries.
3.1 Key challenges
France is not part of NAFTA for conducting trading activities with countries, however, even if France was a part of the regional bloc then it would pose some serious threats and challenges to the country. In case France starts trading activities with the regional bloc, the country can face several challenges as well that can hamper the trading activities massively.
As opined by Witt (2019), it can increase the inflation rate in the USA, which can affect the economy of the country. As the USA is one of the leading countries in the world in terms of economy, inflation can massively impact the price of products. The rise in inflation can increase the price of products and services, which can impact foreign business in the USA.
Thus, the buying power of consumers is going to decline in the USA, which can be a massive problem for the global economy. The USA is one of the major contributors to the global economy and including France in the NAFTA can create several problems for both France and the global economy.
Figure 3: USA trade through NAFTA
(Source: Weforum.org, 2022)
The rise in inflation can increase the price of assets such as real estate as well within the USA, MEXICO and Canada. Due to the rise in the price of assets, the cash flow within the real estate sector of the three countries is going to reduce by a massive margin.
Besides the price of assets, the interest rate on loan amounts within USA and France can fluctuate massively, which also affects the cash flow. As per the opinion of Lakshman et al. (2020), the price of gas and oil is going to rise in both countries that can affect import and export activities.
Thus, a rise in the inflation rate can create several side effects for countries that are very active in trading activities. Consumer spending is going to be reduced with the increase in the inflation rate that affects the economic growth of the country.
NAFTA can create a loss of several manufacturing jobs for the USA and France. As a developed country, the manufacturing sector of France is one of the main sectors of the country that contributes heavily towards the economy of the country.
According to Fainshmidt et al. (2020), France is one of the leading manufacturers of aircraft and automobiles, which can be affected due to the inclusion of NAFTA. By following the rules of NAFTA, more than 60% of vehicles must be developed within North America thus; it can create problems for the automotive manufacturing sector of France and subsequently affect the economy of France.
Thus, NAFTA is considerd to be most suitable for countries of North America to conduct trading operations. Furthermore, NAFTA can reduce the standards of every country after the addition of countries with the current set of three North American countries.
3.2 Key competition
While getting connected to the new trading block can be challenging for a country. There are various challenges in terms of culture, language, habits of the people, and choice of the people are some of the key challenges which can be faced by a country in terms of being a part of a trading block (Bahoo et al. 2020).http://BU7412 International Business Assignment Sample
As France is not the merit of NAFTA, hence the country may be able to face obstruction in terms of joining the tread blocks. As per the research, it can be seen that the tread agreement is done between the three different countries of the North American continent that is Canada, Mexico and the USA (Nambisan et al. 2019). http://BU7412 International Business Assignment Sample
Therefore, in case France is willing to take part in that case, it may be problematic for the existing members of the continent. This is because; this has a contribution of about 21.2% of the GDP in the world (Imf. org, 2023). http://BU7412 International Business Assignment Sample
The major competition of France in NAFTA will be the trade alliances and communication between Mexico and the USA. The market entry of France will lead to changes in the cycles of trade exchange between countries. In earlier times such disturbances in sales have been noted between the USA, Canada and Mexico (Cuypers et al. 2020).http://BU7412 International Business Assignment Sample
On the other hand, as Mexico is less developed than France, in case France is going to be an of this group, in that case, it may lead to an increase in the trade deficit between Mexico USA and Canada France.
Hence, that is the reason the existing members of the trading block will try to block the participation of France. In addition, this trading block is a regional trading block hence, it is not a geographically viable option for France as well as other countries (Ren et al. 2021).http://BU7412 International Business Assignment Sample
3.3 Conclusion
From the study, it can be concluded that there are some challenges that France may help to face in terms of joining the new trading block. As NAFTA is a regional block, it may give access to the business France to get free tread access in the market of participating countries.
However, in that case, there can be issues regarding the fraction of the inflation rate and the loss of jobs in the manufacturing sectors in the country. This is due to the lower wage rate and higher unemployment in the market in Mexico. This agreement will allow workers to migrate from one country to another in search of jobs. This will have a direct effect on the employment market in France.
4. Section 3 – Steps and initiatives
4.1 Initiatives
In order to be a part of the trade agreement there are many advantages that can be helpful in terms of the economic growth of a country like France. It can be able to increase the economic growth of the county and improve the Dynamic Business Climate in a country.
It can be helpful in terms of getting opportunities for the business of a country and helping them to expand their business to new places at a faster pace (Li et al. 2019).http://BU7412 International Business Assignment Sample It also can be helpful for the government in terms of lowering the government standings in times of exporting the products of the country from one country to another.
Therefore, due to all these factors, France had taken some initiatives that can be helpful in terms of helping to be a part of NAFTA without the objection of the participating country; they are as follows:
Limitation to the entry of labourers
From the research, it can be seen that the employment rate of the people in Mexico is competitively high, hence France being a developed country can be able to take advantage of the situation. Being a developed country the business of France can be able to hire people from outside the country ( Hsieh et al. 2019).http://BU7412 International Business Assignment Sample
However, recruitment of people outside the country on a large scale can be problematic for France in the long run, however, in that case, the government may be able to issue temporary visas to a limited number of people every year which can be helpful in terms of business in France.
On the other hand, once the visa of the person gets expired the person needs to return to their own country. This can be helpful for both France and the other countries which are already members of the trade pack.
On the other hand, as France will be allowing labourers from three other countries it can be helpful in making a good strategy relating to the other countries. This can be helpful in terms of increasing the political importance of France in international politics (Cuervo-Cazurra et al. 2019). http://BU7412 International Business Assignment Sample
Increase in trading activity
As per the research, it can be seen that NAFTA has a higher economic contribution in terms of GDP growth in the world economy. Hence, on that aspect, France being a part of the tread pack can be beneficial to the deal to a large extent. This can affect the revenue from taxes archived by the government of these countries.
It can be helpful in terms of getting access to the market of the USA, Canada and Mexico. In that aspect, the USA is one of the most important countries that can be helpful in terms of improving the revenue from tread in the country. The USA has a good trade relation of about $43.0 billion in the year 2020. Hence, getting into a trade agreement with the USA and Canada can be helpful, in terms of decreasing the cost of products in France.
Due to the free trade agreements, the government of the participating country cannot be able to impose higher tax rates that can give competitive advantages to the business of France in these countries. On the other hand, in countries like Mexico where the employment rate is, people can get access to better technology and work environments that can be helpful in terms of improving their lifestyle (Vătămănescu et al. 2020). http://BU7412 International Business Assignment Sample
Limitation to the type of products to import and export
The type of products to be exported can be a trade deal can be an important decision that can be helpful in terms of setting the importance of a trade agreement. In terms of ascertaining the profit France is going to get from being part of the deal, the type of products that are in the deal needs to be ascertained.
Being a part of this tread block France can be able to get access to the market of the USA and Canada. In that aspect, it can be seen that the higher tread items of France to the USA are the various types of chemicals, plastic items, various types of transportation, types of equipment, machinations and many more (Stallkamp and Schotter, 2021).http://BU7412 International Business Assignment Sample On the other hand, Canada, which imports cereal, flour, milk and many other food items, is one of the essential trading partners of Canada.
Hence both Canada and the USA have issues in case France is going to be a part of this trading block. In addition, France also exports other products like minerals, oils and other products which are very crucial for the energy sector in Canada. Therefore, in case France is willing to join the trade agreement in NAFTA the country makes sure that these products are present in the deal and can be helpful in terms of improving the relationship with the participating countries (Tashman et al. 2019).http://BU7412 International Business Assignment Sample This can help to decrease the tariff imposed by the government of the participating country. Therefore, this will help France to lower the price of products and services offered to the various countries.
Improve the political importance of France on the international stage
In the case of joining a treaty agreement to NAFTA, France can be able to increase its importance in the global platforms. As NAFTA is a regional trade agreement, hence the participation of France, this trade agreement can be helpful in terms of improving the political influence of France in the region of North American Continents.
It can be helpful for both the business and the people of France to be a part of the organisation (Petricevic and Teece, 2019).http://BU7412 International Business Assignment Sample It can be helpful in terms of improving economic activity, the distribution of the culture, and other factors such as the supply of labour in chief wage rate that can be helpful in terms of increase in the economic activity in the country. In addition, as all four countries will be economically connected, hence, it can help to make the same economic goals for the country as a group.
4.2 Conclusion
Hence, these are some of the initiatives that can be taken by France in order to be a part of NAFTA. This can be helpful in terms of improving the relationship with the countries which are already part of NAFTA. From the research, it can be seen that Mexico, which is a member of NAFTA, has a higher rate of unemployment. In that case, France can help the country to give limited access to the workers.
It can help to lower the unemployment rate in Mexico and highest the number of chief labour in France. On the other hand, this agreement can help the USA by allowing the country to get access to its growing online business to expand in France with less government interaction and limited tariffs (Witt, 2019).http://BU7412 International Business Assignment Sample
On the other hand, it can be helpful to Canada in terms of increasing the export of Canadian goods to the market of France. This can help to lower the trade deficit between Canada and France. Hence this contact can be a win-win situation for both France and the other members of NAFTA which are already a part of.
5 Conclusion and Recommendations
5.1 Conclusion
After the study ends it can be concluded that expanding a business outside the country can be helpful in terms of improving the growth rate of the business. In addition, it can be helpful in terms of getting access to the new market for the business that can be helpful in all aspects.
This can help to get access to talents from outside the country after getting international recognition. Therefore, all these factors can be helpful in terms of expanding the business outside the country. On that aspect, joining France in NAFTA can be helpful in terms of improving the efficiency of business to growth in the countries outside the country.
On the other hand, it can be helpful to businesses in participating countries to grow their business in France and lower the cost of expanding the business.
5.2 Recommendations
Based on the above discussion, some of the recommendations can be referred to that can be helpful in terms of improving the business performance in the new country. The business needs to provide a strong offering that can be helpful in terms of price offering and quality that can help to improve the image of the business in the new market.
In addition, the business is new to making the supply chain logistics in a way that can be effective to provide service of products and services for constrained supply. This can help to maintain the attraction of the customer to the business in a new market. In addition, the business needs to make a strategic partnership that can be helpful in terms of maintaining sustainability and help to maintain the image of the business in the new market.
The business also needs to use local resources such as the labour fund and other resources that can be helpful in terms of lowering the fund used in the organisation. It can be helpful in terms of increasing the profitability of the business in the new market. Therefore, in this way, the business can be able to improve its capability of increasing profits and attracting new customers to the business.
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