The international business strategy

This essay paper will concentrate on Brexit as the latest foreign problem. The United Kingdom’s decision on June 23rd, 2016 to vote on its exit from the European Union is one of the International Current Affairs (ICAs) that has had a major effect on international business policy (IBS). The United Kingdom’s decision to leave the European Union has been characterized as having significant foreign business strategy implications not just for the United Kingdom and the rest of the European Union. but also to the entire world_x0092_s business strategy and economy stability (Bower, Leonard, & Paine, 2016, p. 174). Thus, this forms it_x0092_s most interesting and important part to be addressed by this essay paper. This is the greatest underlying facts since many nations of the world have great and critical business ties or connections that had been operating best under the cooperation and participation of Britain as a member of the European Union. According to the International Business Strategy statistics, the real GDP of the United Kingdom and other nations that have always had business connections with the former European Union is projected and expected to fall by over six percent below the normal baseline forecast by at around 2020. It would be a total business and economic pain traversing internationally and affecting.

The impact of the exit on the International business strategy is real and is never imaginations. To support the truth, immediately after the day of successful Brexit voting, the stoke market of United Kingdom crashed down by over about 3.5 percent with the pound value declining 8 percent suggesting instability of the international business strategies of companies and firms operating from within and outside the united kingdom and the European Union at large. In addition, the impact of the exit action_x0092_s storm would easily weathered however, the political risk is also current integrated in the equation and the international businesses_x0092_ strategies and market of most of the international firms and companies operating in connection with the European Union and the United Kingdom are likely yet to proves to be extremely volatile all just in the shortest term possible (Cavusgil, Knight, & Riesenberger, 2016, p. 241). Therefore, this paper will begin by addressing the consequences of Brexit on the international business strategy in relation to entry to the foreign markets, managing of the international business strategic alliances and foreign direct investing and finally conclude with possible alternative solution to the effected countries and businesses.

The exist, as an International Current Affairs (ICA), will have a numbers of implications on the international business strategies of many countries and firms of the world which obviously would have undesirable effects on the international business particularly in relation to the age or era of globalization. Moreover, the popular vote which favored the Britain exist from the European Union has not only evolved in the political and social contexts, but also by the widest range in the contexts of international economy and business strategies which has subsequently raised substantial questions both for the European Union and the rest of the world. According to the Europe and the rest of the world, the exit access action by the Britain is viewed in terms of its influence on their entry into the foreign market, management of the international strategic alliances and foreign investment in the countries that shares common regional markets with the United Kingdom (Doole,& Lowe, 2016, p. 413). The exit action is already a major challenge to the future of the international business strategy guiding trade-based and economic integration, multilateralism, sovereignty and globalization. In fact, the right response to the questions raised following the exit action have a very great potential to contribute to a robust set of economic and trade relationships globally, since many nations and business firms pursue various different connections that are equally and mutually desired.

Generally, one of the main immediate international impacts of the Brexit is the international businesses and market complications, especially in the financial market across the entire world. This has included the international strategic management of the asset industry. Such have been in the happenings despite the fact that the actual international business strategy regulatory consequences are still yet uncertain. In fact, the later effects are expected to be more severe owing to the fact that, UK is currently still continue to a partial member of the European Union until the period it will make its official departure possibly in the year 2018 or much later.

Entry to the foreign markets

The exit of the Britain from the European Union has been and indeed has translated into the economy of the European and the bordering countries plunging into deep uncertainties (Bower, Leonard, & Paine, 2016, p. 216). This has greatly interrupted all the international business strategies that most of the nations in tie or share common market regions with the previously united European Union, had set forth or planned to set in place in regard to how, when, where and where to enter into foreign markets. This has been for sure reflected the first and initial instance course of actions which have been purely facilitated by the business destabilizing financial market volatility. This has also been accompanied by drastic shift on the real internal regional economy, which has seen many international companies and business reining much deeper into their spending to fit into the restructured policies by regional market zones for entry to their foreign markets (Cavusgil, Knight, & Riesenberger, 2016, p. 217). Nonetheless, the initially increasing index of the United Kingdom funds have even withhold their redemptions due to the significant and the prompt fall in the valuation of the assets, for instance, in the commercial real estate valuation. Moreover, the volatility of the financial market as related the brexit have also been pointed out to have very significant effects on the valuations of the derivative contracts which has been exist previously. Such measures and their effects as been mentioned have already posed big policies-based challenges to different countries and business that have been willing to enter and participate in the foreign markets, particular in those markets that have been victimized with action of the Britain to exit the European Union.

In conjunction, according to the International Current Affairs report on the International Business Strategy statistics, the uncertainty concerning the economic and business cost of the Britain vote to leave the European Union, it has been reported to greatly and abruptly contribute to the fell-off in tha values of the assets of the United Kingdom following by substantial depreciation in the value of their pound. This also has not only affected the United Kingdom, but also the other countries and companies who own shares in the United Kingdom and as well share common market regions with same, hence subsequently discourages other countries who would have wished to joins and share such foreign market grounds.

In fact, immediately after the success exit of Britain, the currency effects also became pronounced immediately, however, on relatively long term basis, perhaps within one full year, in the projection it has been assumed that the exit action would translate to the average value of the UK pound compared against US dollar and the euro in June, 2017 would be definitely than it were in 2015 by about 14 to 15 percent.

Generally, it is therefore obvious that going beyond the normal currency market exchange rates, the prevailing financial conditions in the both in the United Kingdom and European Union regional foreign markets would generally get tougher and tighten for other countries and companies to enter into (Young, 2015, p. 316). This has been linked to the steadily increasing lending rates and bond yields as has been reflected by the additional or extra premium charges related with United Kingdom borrowers currently. Furthermore, even the average yields on the UK government_x0092_s ten-year international business bond is already expected to increase by 0.6 percent average point relatively higher than their non-Brexit forecast baseline especially both in third and fourth quarter of the year 2017. However, in the meanwhile, the impact of the exit on the international business and economic which currently spikes to greater uncertainties and anxieties is already severely felt across the entire world, with the confidences of the consumers gradually slumping while firms and companies all over the world with strong business ties with United Kingdom delaying their hiring and investment decisions to enter or retain their stay in the affected foreign markets. This has however been expected to contribute largely to the constantly compounding effects on the high domestic demand especially in this first half of 2017.

As even though the United Kingdom-European Union negotiations wait to be concluded in 2017-18, the economy of the two regions and their neighboring countries obviously will continuous undergoing severely deep second round of the exist. The previous sharp economic depreciation which has been witnessed through the drastic decline in the value of the United Kingdom_x0092_s pound in 2016 is expected to start showing up in the rising import and export cost. According to Bower, Leonard, & Paine (2016, p. 212), this would serves has the biggest blow out of the exit action to the International Business Strategies set in place by the international companies and industries. For instance, Wall-mart was seen reducing exportation of its shares to most of its outlets in the United Kingdom, instantly after the declaration of the Britain exit from the European Union. Nevertheless, it is therefore vivid that the level to which these impacts would translates directly into the prices inflation of the consumers_x0092_ commodities in between the year 2017 and 2018 is likely to be limited by the hesitance of the international industries and companies to increase their prices in the established environment of weak demand by consumers. Therefore, with the further official accomplishment of the Brexit in 2018, the existing inflation is therefore expected to overshoot beyond its target of 2 percent, although with some slightly percentage figures. Subsequently, a huge squeeze in the profit margin would be noticed, which therefore might lead to a big decline in the availability of job opportunities. In addition to this, with most of the international companies and industries operating within the market zones victimized by the Britain exit from the European Union referring their decision for hiring workforce to continue working in those market regions, the rate of unemployment has therefore been anticipated to increase beginning from 2017. Perhaps the figure would be at around 6 percent in 2018 after the official exit. This in turn, affects the international business strategy on human resources allocation by companies and industries operating within the victimized market zones.

Managing international strategic alliances

Most probably the majority of people have constantly assumed that the United Kingdom would some stringent level of restriction on the free labor movement and lesser contributions to the budget of the European Union while trying to retain some of the access privileges into the European Market for food and other commercial commodities, but the facts remains clearly that all the International businesses and companies operating in tie and share common market zones with the United Kingdom would totally new prohibitive barriers to access most of the important trade in services including management of their international business and trading alliances (Cavusgil, Knight, & Riesenberger, 2016, p. 179). If in case it would be assumed that the relationship between the United and the European Union would come to exist later, then from this particular point of view, the economic and business story would be a little less in relation to uncertainty and turn to be more of concerning with the establishment of the new relationship between the United Kingdom and the European Union to form new international business strategic alliances that currently begun to cease to exist anymore.

Going by the current business situations that exist on the ground within the international market regions that have been affect by the exit of Britain from the European Union, the domestic demand due to the international business alliances had already started shrinking which indeed would be very difficult recover from its current worst lower level base. Moreover, according to Cavusgil, Knight, & Riesenberger (2016, p. 222), the combined effects of the stringent restriction of the labor migration and the possible location of industries or companies, especially those operating in the international service sector, would therefore translates to the decline in the population of United Kingdom labor market. This would make it very difficult for the international business organization to form and maintain their international business strategic alliances particularly in the United Kingdom and other neighboring trading regions affected by the exit of the Britain for the European Union. This would be the exact case since industries and other business organization would definitely lack adequate workforce to deploy in those areas (Bower, Leonard, & Paine, 2016, p. 215). Due to such occurrence, the industries and companies would experience poor International business strategies formation and organization, thus resulting into the exacerbation of the management problems that had already been to existence, which in other words can be characterized with weaker productivity and performance. In addition, the action of restricting free movement of labor would also leads to the total loss of free access to the single markets for service, and thus resulting into a drastic decline in the exportation of international business services

Foreign direct investment

Direct foreign investment by international firms and industries in the regions impacted by the exit of Britain form the European Union will be another sector of International Business Strategies hampered. In fact, even before the confirmation of the Brexit while it was still under hot debate, a number of big companies and industries who are the key participants in foreign direct investment such as Apple, General Electric and Wal-Mart had already started showing their concerns and worries.

They were already totally against the vote by the Britain to leave the European Union simply because they had no alternatives rather than defending and protecting their foreign markets for direct foreign investments, especially those that are within the regions of European Union and other related trade regions across the world. For example, Sir Terry Leahy, Marc Bolland, Justin King and Sir Ian Cheshire who are chief heads of world greatest foreign market investment firms which had been mentioned earlier on, they jointly issued common statement which clearly highlighted some of the key foreign direct investment related reasons why the Britain would not seek vote for its leaving as a member of the European Union. Retaining of business loyalty within the affected trade region by foreign direct investment firms was one of the reasons that were put forth by the heads.

Conclusion

The decision by the Britain on 23rd of June, 2016 to vote for its exist from the European Union is one of the International Current Affairs (ICAs). Such decision has had great impact on the International Business strategy (IBS). The International Business Strategy statistics outlines that the real GDP of the United Kingdom and other nations that have always had business connections with the former European Union is projected and expected to fall by over six percent below the normal baseline forecast by at around 2020. There exist series of impact of Brexit including stock market crash, decline in the value of currency, instability of the international business strategies of companies and firms among other variables such as foreign markets, international strategic alliances, Foreign direct investment. The effect has different dimensions, which are both positive and negative to the affected countries and business entities.

_x000c_Bibliography

Bower, J. L., Leonard, H. B., & Paine, L. S. (2016). Capitalism at risk: rethinking the role of business. http://www.books24x7.com/marc.asp?bookid=45559.

Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2016). International business: strategy, management, and the new realities. Upper saddle River, N.J., Pearson Prentice Hall.

Doole, I., & Lowe, R. (2016). International marketing strategy: analysis, development and implementation. London, Cengage Learning.

Young, H. (2015). This blessed plot: Britain and Europe from Churchill to Blair. Woodstock, NY, Overlook Press.