Arcade

The Potential Benefits and Social Costs of International Business for Domestic and Foreign Partners

With domestic and foreign companies trading globally, it has now brought into the spotlight, both the benefits and social costs of International Business.

Potential Benefits

Access to Markets[pic 1]

Access to foreign markets means the ability for a company to expand and grow beyond the borders of their own country as a method of survival.

Cheaper Labour[pic 2]

By going to lower wage countries, companies can increase their profitability by providing customers what they need and want, but at a lower production cost.

Increased Quality and Quantity of Goods

Trading with other countries can increase both the quality and quantity of goods available for purchase.  Ex: Bananas: Canada can not grow them, but by trading Canadians can buy them.

Access to Resources

Some countries may lack the resources to run its society.  So in order to meet the resource requirements, countries buy abroad.  Ex: Japan imports oil for car use.

Social Costs

Outsourcing

Since labour is cheaper in other countries, a company may shift its internal company functions to an outside firm to handle these functions at a cheaper cost.  Thus resulting in job losses in the home country.  

Human Rights and Labour Abuses

Since different countries have different laws, companies may exploit this loop hole and may employ unethical practices to produce its goods and services.  

Environmental Degradation

Environmental laws vary around the world.  What is not acceptable in Canada may be allowed in a foreign country.  Some companies may move their operations into a country with lax environmental laws, as away to save money on pollution control.  However, this may result in greater pollution of the earth.

[pic 3]