This includes the availability of manpower and natural resources as well as the availability and cost of money (Cavusgil, Zou, & Naidu, 1993, p. 501). Manpower can be important regardless of whether a company decides to export its goods from the United States or manufacture them locally. While there will be a difference in the actual number of workers the company employs depending on the point of manufacture, the company must still be concerned with the availability of labor, the skill level, and the cost associated with the workers. Natural resources are an issue if the company decides to manufacture its product locally.
The financial environment is especially critical to those companies doing business in more than one country. This is because balance of payments, the foreign exchange rate and regulations regarding how much money can be transferred between countries all come into play, and none of these factors are important to a company which operates in only one country. There can be considerable risk to companies that do business in countries where the economic environment is unstable because devaluation of currency can greatly affect the profits of the company. Similarly, a country where there is an unstable currency may be indicative of a country where other factors would suggest that long-term success may be questionable. In some cases, the instability of a nation's currency can be a hallmark that the government will move to take over (nationalize) some industries ("Practical", 1991, p. 7).
Economic Structure and System - Saudi Arabia
Due to a sharp rise in petroleum revenues in 1974 following the 1973 Arab-Israeli war, Saudi Arabia became one of the fastest growing nations in the world. It enjoyed a substantial surplus in its overall trade with other countries; imports increased rapidly; and ample government revenues were available for development, defense, and aid to other Arab and Islamic countries. However, h...
Foreign Direct Investment In Today's Global Market. (1969, December 31). In LotsofEssays.com. Retrieved 09:29, February 08, 2016, from http://www.collegetermpapers.com/viewpaper/1303852051.html