Trading Internationally is nothing new, it is been happening since hundreds of years, just differently, people had to travel long distances on animals such as camels, and communication was very limited, never have been International trade has been to such level to it is today. International trade is possible through alot of ways, one way is outsourcing, it is taking part of your business to abroad, mainly it is in manufacturing for example Adidas, a German company has moved it production to different parts of Asia. Importing and exporting is another example of trading internationally, while giving out franchisees to other part of the world like Hardees just opened their franchise in Lahore,Pakistan, is also a part of international trading. A joint venture, that is a contract between two companies from different regions is also a way to do business internationally, moreover, one of the most ways to trade internationally is buying things online, from websites like Ebay, Amazon, Taobao, etc.
We can use PESTLE's tool to international trade to consider the aspects of trading internationally. Firstly, political factor of the country where we plan to trade is very important, it is always a threat to operate in a politically unstable country, which has high corruption level and alot of risk is involved. Economic factors are always a plus point according to the theory of absolute advantage, do what your country is good at, with other parts of the world like in Pakistan, there are lots of fishes, so selling in places where their is no assess to fishes would be a great target. Also, thinking about the culture you are planning to trade in, for instance, if you try to sell something which is off against hindu interest, you can never sell that in India as it is a Hindu majority populated country,so you must know that what you are willing to trade is accepted culturally. Technology is also very important, you can question yourself, does it have a port? good roads? port? do they have a good internet service?. Also, legally whether the laws support you, or they restrict you from trading, for instance, the European union, it is a trading bloc, where there is no tariff or taxes imposed for trading goods and also, like in Saudi Arabia, you cannot sell alcohol easily, you need lots of formality and procedures. Lastly, environmental, it is mainly about natural resources, do they have the needed resources available?
So PESTLE helps us in finding the context, the external factors which might affect the organization.
Globalisation is the movement of domestics and national markets to international level, in simple words it is nothing but an increase in international integration making this world a global village. Some of the factors that leads the world to globalisation is advancement in communication, that is, it is easy to be in contact with the whole world, doesn't matter where you are. Internet, which has opened the boundaries, we can trade on it, communicate on it and advertise on it, in the whole world within seconds, Easy and quick travel methods and reduction in barriers to enter new places, a British passport holder can enter 173 countries in the world without a visa or a on arrival visa and also, Saturated markets forces business to move to different markets, where the cost of production is lower.
There are alot of advantages of globalisation, for instance, Adidas opening their factory in Pakistan, would benefit by having all the raw material available, decreasing their production cost like cheaper labour would be available, while a huge capital would be invested for Pakistan, which will be good for their economy, employment would be created also too for example. Also, saturation is stopped, for example, China is overpopulated, so the people can move to less populated places, like Canada and Australia. Also, Trade barriers getting lesser means that lesser formalities to trade, imports and exports can be made easily and cheaper. Furthermore, it provides incentive for countries to specialize and gain advantages of it, like Hawaii in America has a very good tourist industry which attracts people internationally.
Globalisation just doesn't have advantages, it has alot of disadvantages too, most importantly, globalisation is a threat to small businesses, as bigger companies may benefit from economies of scale and lower cost, while the smaller businesses struggle with cost. Also, it is not always good for the country, maybe the host country may send all the profits to the parent country. Also one of the major disadvantages is, if one country goes into recession, the affect is faced by other countries too, like because of the recession which struck America in 2008, alot of asian countries also got into recession, like UAE and also, in alot of countries in Africa, using child labour is very common, so the bigger companies setup because they could benefit from the advantages of using child labour for their production which is very unethical. Also, because of globalisation, alot of people, whose interest conflicts with globalisation starts to protest, which causes instability. Moreover, the natural resources of other countries might be exploited by an International company and lastly globalisation leads to technological poverty, for example, even today, only 1/100 people have acess to the internet in Africa. Also,the diagram below shows how the rich becomes richer while the poor suffers.
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