P2: Describe the mechanisms that regulate international trade.
In this assignment I am going describe how some restrictions that prevents trading within Europe and around world known as international trading. I will be describing the mechanisms which regulate international trade. Furthermore, I will also state the aspects which create an advantage and disadvantage for international trading. I will be basing this around the business of NatWest.
Benefits of international trade
The benefits of international business are there will be more customers joining the business which will make the business more internationally recognised. This will as result increase NatWest’s revenue which will help them expand into different markets.Opening up NatWest banks in other countries will increase their reputation as well.
Currency
Many of the European countries have the same currency between them. This makes it much easier for those countries that have same the currency to trade without needing to convert into different currencies. Some countries may not accept a specific currency; it may be because of the value of the currency or it’s not recognised for it to be converted. It is understood that it costs small businesses much more than a multi-national business for currency conversion fees. The watchdog's complaint claimed that converting £500 into euros for some English businesses could cost between £10 and £30, even though the service provided was essentially the same. Single currency is used by 17 nations out of 27 European countries, which makes it easier for businesses such as NatWest to trade with most EU nations because they do not have to waste time converting to a different currency, which will also cost them extra hidden charges. Currency changes every day so it will be more time consuming for businesses. Free trade is also an important part of trading internationally, this also has a link with the EU, as they are able to trade freely. It is in the EU’s motto, free movement of Goods, Services and capital, so it will be cheaper for businesses within the EU to trade freely. This encourages trading within the EU because they can trade freely with most nations that have same currencies, so there is no need to convert the currency.
If NatWest was operating outside of the EU it will be greatly complicated to trade with businesses in the European Union. Therefore it will be difficult for NatWest to do business with other countries with different currencies. This is because it will cost small and big businesses in the UK to change the currency known as currency cost. Some of the currency has lost its value, which will make it difficult for other countries to accept. It will take time to convert which will make the deal late and could cost the business some important deals.
Technology
Technology has made the trading more quickly than it was 50 years ago. Technology such as direct debit and internet banking make it quicker and safer. For example you can send money to some anytime and anywhere. Technology such as banks transaction and internet has made it easier for the businesses to do the business more quickly and happily. Technology such as Fax machine can send the invoice within minutes and technology such as online banking can make the transaction very fast than it was 50 years ago. It is also an advantage for businesses to launch a product online which can be seen by the public audience from other countries and therefore they can make an online transaction which can be quicker for a customer to receive a product or service. Internet is one of the most accessible and popular technologies in the world. The internet works 24 hours a day and 7 days week, which will help the businesses complete transactions easily and faster. This can help transaction become more faster and the products can be supplied faster and easily. As a result it will be an advantage for the business and more customers will join the business.
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